SK Hynix beats forecasts with record quarterly profit, sees explosive memory chip demand

By Heekyong Yang and Hyunjoo Jin

SEOUL, Jan 28 (Reuters) - South Korea's SK Hynix 000660.KS on Wednesday reported its quarterly profit more than doubled, hitting a record high and beating forecasts, and predicted that the artificial intelligence boom would sustain rapid growth in memory chip demand.

The earnings beat plus the announcement of its biggest ever share cancellation helped propel shares in the Nvidia NVDA.O supplier 9% higher in after-hours trading.

SK Hynix shares have risen about 30% so far this year.

Insatiable thirst for AI has lifted prices for both advanced and conventional memory chips, and SK Hynix logged a 137% surge in operating profit to 19.2 trillion won ($13.5 billion) for the fourth quarter, ahead of a LSEG SmartEstimate prediction of 17.7 trillion won.

The company has managed to carve out an enviable lead in high bandwidth memory (HBM) used in artificial intelligence chipsets designed by the likes of Nvidia, commanding a 61% share of the HBM market, according to Macquarie Equity Research.

Its HBM sales more than doubled in 2025 and mass production of its next-generation HBM chips is progressing as planned.

SK Hynix is also benefiting from AI demand boosting prices for commodity DRAM and NAND chips used in servers, personal computers and mobile devices.

For example, contract prices for 16 gigabyte DDR5, a popular type of DRAM chip, more than quadrupled last quarter from a year earlier, according to market tracker TrendForce, which sees those prices rising further 55% to 60% in the current quarter.

Dutch chip equipment maker ASML ASML.AS logged record orders in the fourth quarter and raised its outlook on Wednesday as demand surged from its AI-focused customers.

SK Hynix said it expected orders for memory chips used in PCs and smartphones to lag overall market growth due to rising prices and tight supply. Analysts have said that chipmakers are prioritising sales to companies building out AI data centres.

SK Hynix announced it would cancel about 12.2 trillion won worth of treasury shares, equivalent to 2.1% of total shares outstanding, in a move that would boost the value of individual remaining shares.

Separately, the company said it would commit $10 billion to a new U.S. entity, tentatively named "AI Company," focused on AI-related investments.

Macquarie Equity Research has predicted this year to be more challenging for the company with its HBM market share falling to 53% as rival Samsung Electronics 005930.KS moves to close the gap.

Samsung plans to start production of its next-generation HBM4 chips next month and supply them to Nvidia, Reuters reported on Monday.

SK Hynix will brief on its fourth-quarter earnings results on Thursday.

($1 = 1,422.2400 won)