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SK Hynix's profits surge, HBM 4 will be mass produced

2025/7/24 18:23:43

SK Hynix is a major supplier of Nvidia's high bandwidth memory products, and the company has announced robust second quarter performance, thanks to strong growth in demand for artificial intelligence chips.  


This South Korean memory chip manufacturer announced on Thursday that the active investment in artificial intelligence (AI) by major global technology companies has driven steady growth in demand for AI memory chips, including 12 layer HBM3E products. The company stated that the shipment volume of DRAM and NAND flash memory products was higher than expected.  


The company stated that given the current booming development of artificial intelligence requiring high-performance chips, it is expected that the strong demand for HBM will continue until 2025.  


SK Hynix stated that its net profit for the three months ending in June was 6.996 trillion Korean won, equivalent to 5.09 billion US dollars, a year-on-year increase of 70%. According to a market consensus estimate compiled by FactSet, this figure is lower than analysts' expectations of 7.087 trillion Korean won.  


The company's revenue increased by 35%, reaching a record high of 22.232 trillion Korean won. Operating profit surged 67% to a record high of 9.213 trillion Korean won, exceeding the expected 4.6 trillion Korean won for this quarter from larger competitor Samsung Electronics.  


Benefiting from the prosperity of the high-end chip market, SK Hynix has an advantage over other HBM manufacturers. So far this year, the stock has risen 55%, outperforming the 33% increase in the South Korean Composite Index (Kospi).  

SK Hynix has become a global leader in the HBM field, and its customers include Nvidia, an American AI giant. According to Counterpoint Research, in the first quarter of this year, SK Hynix surpassed its competitor Samsung Electronics in the global DRAM market for the first time.  


A report released earlier this month by Counterpoint Research estimated that SK Hynix's DRAM and NAND revenue in the second quarter has equaled Samsung's total, as the two compete for the top spot in the global memory market. NAND is a type of flash memory commonly used in storage devices.  


Samsung and American memory manufacturer Micron Technology are both seeking to catch up with SK Hynix in the HBM field. However, analysts expect SK Hynix's dominant position to continue in the short term.  


Ray Wang, Director of Semiconductor, Supply Chain, and Emerging Technologies Research at Futurum Group, said, "As of now, I believe SK Hynix still maintains a leading position in the HBM competition... despite Samsung and Micron's efforts to catch up. " 


He added, "I expect this advantage to last until the remaining time of 2025 and extend to 2026.


SK Hynix also stated that it has expanded its sales of 12 inch HBM3e in the DRAM field, while achieving growth in NAND sales across all application areas. With its leading competitiveness in the AI memory field and profit oriented management principles, the company has maintained a positive profit trend. " 


The company stated that its inventory level remained stable in the second quarter due to increased memory purchases from customers and increased finished product production. The company expects that memory demand will continue to grow as customers plan to launch new products in the second half of the year.  


The company stated that it plans to double the revenue related to HBM compared to the previous year and prepare for the supply of HBM4 according to customer requirements.  


The company stated that it plans to mass produce its new cutting-edge HBM4 product in the second half of 2025, which may expand its leading advantage over Samsung and Micron Technologies. After SK Hynix mass-produced the 12 layer HBM3E product for Nvidia for the first time last year, it briefly led its competitors.  


However, after the soaring stock price of this South Korean chip manufacturer, some analysts are cautious about it. Goldman Sachs warned last week that SK Hynix's profit growth may lose momentum in 2026 due to a possible drop in HBM product prices.  


Goldman Sachs has downgraded the stock's rating from "buy" to "neutral", citing the possibility of intensified competition in the HBM market and an unfavorable supply and demand situation next year.  


President Trump's unpredictable trade policies also pose a threat to the prospects of SK Hynix. If South Korea fails to reach a trade agreement with the Trump administration before August 1st, it will face a so-called reciprocal tariff of 25%.  


Trade officials from both sides will resume negotiations in Washington later this week, and Seoul is seeking to avoid or reduce comprehensive tariffs imposed by the United States.  


The US leader also threatened to impose separate tariffs on semiconductors, as well as tariffs on imports of automobiles, steel, and aluminum.  


At the same time, Trump has decided to allow Nvidia to export its H20 AI chip using low-end HBM products to China. This move marks a reversal of policy by the US Department of Commerce, which restricted the sale of the chip to Chinese customers in April.  


NH Investment&Securities senior analyst Ryu Young ho said that the company's modification of capital expenditures to actively respond to customer demand next year "seems to reflect its confidence" as it will face fierce competition from Samsung Electronics next year.  


SK Hynix stated in a statement that it expects the competition among large technology companies to enhance the inference capabilities of artificial intelligence models to intensify, leading to an increase in demand for high-performance, high-capacity memory products. " 


Analysts say that driven by strong demand for artificial intelligence, SK Hynix has achieved a series of record profits as the company prepares to deal with potential tariffs from the United States and increasing competition from rivals in supplying advanced chips to Nvidia.  


The company's profit is twice the expected quarterly operating profit of its local competitor Samsung Electronics. Samsung Electronics expects its second quarter operating profit to plummet by 56% this month, lower than expected, due to weak sales of artificial intelligence chips.

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