SK hynix Posts Over KRW 7 Trillion in Q1 Operating Profit… “Strong Demand for HBM to Persist”

[Korea Financial Times, Kim JaeHun] SK hynix has reported profitability that exceeded market expectations, driven by robust growth in high-bandwidth memory (HBM). Despite concerns stemming from China’s DeepSeek and potential semiconductor tariffs under the Trump administration, strong demand for AI memory continued. Anticipating an extended AI memory boom, the company plans to expand facility investments to enhance technological leadership and meet customer needs.

On April 24, SK hynix announced its consolidated earnings for the first quarter of this year, reporting revenue of KRW 17.6391 trillion, operating profit of KRW 7.4405 trillion (operating margin of 42%), and net income of KRW 8.1082 trillion (net margin of 46%).

Revenue rose by approximately 42% year-on-year. Operating profit and net income surged by 158% and 323%, respectively, during the same period, reflecting solid profitability. This quarter’s revenue and operating profit marked the second-highest figures in company history, following the record-breaking performance of the previous quarter. The operating margin improved by 1 percentage point from the previous quarter, maintaining an upward trend for eight consecutive quarters.
While the first quarter is typically a low season for the semiconductor industry, the launch of China-based AI startup DeepSeek’s lightweight inference model and tariff uncertainties under the Trump administration prompted major clients to stockpile AI memory, supporting strong growth.

In a conference call following the earnings release, Kim Woo-hyun, Executive Vice President and CFO of SK hynix, stated, “In Q1, the memory market recovered faster than expected due to the interplay between intensifying AI development competition and inventory buildup demand. Accordingly, we expanded sales of high-value-added products such as HBM3E (12-layer) and DDR5.”

He added, “Despite the seasonal downturn, we achieved results that clearly demonstrate our enhanced competitiveness. Even if market conditions enter a correction phase, we will continue improving our business structure to maintain differentiated performance.”

As a result of this strong performance, the company’s cash and cash equivalents increased to KRW 14.3 trillion as of the end of Q1, up KRW 200 billion from the end of last year. Consequently, the debt-to-equity ratio and net debt ratio improved to 29% and 11%, respectively.

Regarding HBM demand, SK hynix explained that, due to the nature of the product involving annual supply agreements with clients, HBM sales this year are expected to double from last year without significant change in outlook. The company anticipates that sales of HBM3E (5th generation) 12-layer products will continue to grow smoothly, with these products accounting for over half of HBM3E sales in the second quarter.

In addition, SK hynix began supplying LPCAMM2, a high-performance memory module for AI PCs, to select PC clients from Q1. The company also plans to supply SOCAMM, a low-power DRAM module for AI servers, in alignment with client demand as it materializes.

EVP Kim stated, “We maintain our initial target for HBM sales to more than double compared to last year. For HBM3E, the 12-layer version, which constitutes the majority of this year’s sales, is expected to represent more than half of HBM3E shipments in Q2. We have internal production capacity that allows us to flexibly respond to changes in customer demand.”

He also shared the latest progress on the development of HBM4 (6th generation), which is targeted for commercialization this year: “We demonstrated our technological leadership by delivering the world’s first HBM4 samples to a major customer in March. We aim to complete mass production readiness for the 12-layer HBM4 within this year.”

In NAND, SK hynix plans to actively respond to demand for high-capacity eSSDs while continuing a prudent investment stance and focusing on profitability-driven operations.

EVP Kim commented, “DeepSeek appears to have significantly lowered the entry barrier for AI development. As development costs decreased, AI project initiatives surged, driving not only demand for HBM but also for high-capacity server DRAM.”

He concluded, “We will prioritize essential investments to meet market demand and ensure timely commercialization of our leading technologies by focusing on future infrastructure, such as fabs. While adhering to our capex principles, we aim to further enhance investment efficiency by targeting products with high demand visibility and solid profitability. As a result, total investment is expected to increase slightly compared to last year.”

Regarding the new M15X fab in Yongin, a key component of SK hynix’s infrastructure strategy, EVP Kim added, “We are targeting Q4 this year for the opening of M15X. This will allow us to secure operational flexibility based on future growth and utilize the new fab in a flexible manner depending on the market environment.”

Kim JaeHun (rlqm93@fntimes.com)