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SK Hynix Q2 Operating Profit Soars Sixfold on AI Demand, Misses Estimates
Summary
South Korean chipmaker SK Hynix reported a record quarterly operating profit of 60.5 trillion won, a more than sixfold increase driven by demand for AI memory chips. However, the result fell short of analyst forecasts as the company benefited less from a price rally in conventional memory.
SK Hynix Inc. reported a more than sixfold increase in its second-quarter operating profit to a record high, fueled by relentless demand for advanced memory chips used in artificial intelligence infrastructure. The chipmaker, a key supplier to Nvidia, said the surge reflects higher prices for its high-performance products as global tech giants expand their AI data centers.
Earnings Breakdown
For the April-June period, SK Hynix posted an operating profit of 60.5 trillion won ($41.62 billion), a dramatic increase from 9.2 trillion won in the same quarter a year earlier, the company announced Wednesday. Despite the record figure, it missed a 64 trillion won forecast from LSEG SmartEstimate, which weights predictions from more consistently accurate analysts.
Quarterly revenue rose 257% year-over-year to 79.3 trillion won. In a statement, SK Hynix attributed the performance to "sustained demand growth from expanding AI infrastructure investments," which allowed high-performance AI server products to lead price increases.
Market Dynamics
The earnings miss was attributed to the company's strategic focus on high-end memory for AI. While this segment is booming, SK Hynix's concentration meant it benefited less than some rivals from an even stronger price recovery in the conventional memory chip market.
AdAccording to market tracker TrendForce, the broader market saw significant price jumps in the second quarter compared to the first:
- Contract prices for certain dynamic random access memory (DRAM) chips surged approximately 52%.
- Prices for some NAND flash memory products doubled.
A Closer Look at Net Profit
SK Hynix's net profit saw an even more substantial rise, increasing more than 13-fold. This was largely driven by 60.9 trillion won in non-operating gains, which the company said included gains related to investment assets.
An analyst at Meritz Securities, Kim Sunwoo, estimated that this gain likely reflects the completed sale of the company's stake in Japanese NAND manufacturer Kioxia. SK Hynix first invested about 4 trillion won in Kioxia in 2018 as part of a Bain Capital-led consortium.
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