Chip Maker SK Hynix Posts Record Quarter as AI Memory Demand Overwhelms Supply

SK Hynix reported record third-quarter results on Wednesday, with revenue of 104.6 trillion won (almost $78 billion) and operating profit of 83.3 trillion won ($65.5 billion), according to its earnings release.

It was the first time the South Korean memory chip maker’s quarterly sales topped 100 trillion won ($74.5 billion).

Revenue rose 328% from a year earlier and operating profit rose 632%, for an operating margin of 80%, which means the company kept about 80 won of profit from its core business for every 100 won of sales. Analysts surveyed by Bloomberg had expected operating profit of 77.5 trillion won.

Net income came in at 39.8 trillion won, up 216% from a year ago but down 58% from the second quarter. CFO Kim Woo-hyun said the gap came from net non-operating expenses of 32.6 trillion won, meaning charges outside chip sales, led by an 11.6 trillion won currency loss and a 22.9 trillion won valuation loss on investments.

SK Hynix told investors that demand for memory will keep outrunning supply through 2030, and that its DRAM and HBM volumes through 2029 are effectively sold out. DRAM is the standard memory in servers, phones and PCs, while high-bandwidth memory, or HBM, is the stacked memory that sits beside AI processors and feeds them data.

“Given the complexities involved in implementing leading-edge processes and the lead times required to construct new production facilities,” Kim Woo-hyun said, “a situation where supply cannot keep up with demand is expected to persist for some time, a constraint projected to continue through 2030.”

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SK Hynix said some customers have recently adjusted their HBM specifications, which it reads as proof that demand is overwhelming supply, since they must build more AI accelerators from a limited quantity of chips. “Demand remains so strong that customers’ volume requirement is more than double that of what we can supply today,” the company said on the call.

To lock in that demand, SK Hynix has signed long-term agreements, contracts that reserve chip volumes years in advance, with 14 key customers including leading global cloud providers. They cover more than 50% of its 2027 and 2028 production capacity, typically run five years, let prices move within an agreed range and include safeguards such as deposits.

SK Hynix expects investment to rise significantly in 2027 as the first phase of its Yongin chip complex enters full-scale operation.

Citigroup analyst Peter Lee opened the Q&A by asking what supports confidence in AI investment when monetization looks slow, a doubt that Citadel founder Ken Griffin raised eight days earlier when he said investors are “almost certainly” in an AI bubble. CEO Kwak Noh-Jung answered that major cloud customers reported year-over-year cloud revenue growth of 30% to 80% and cloud order backlogs up two-fold to five-fold.

Kwak added that AI spending, once concentrated among a few big tech companies, is broadening to non-tech firms, sovereign AI projects (government-backed national computing) and on-prem setups (companies running AI on their own servers), so one buyer slowing down would hurt less.

Financing is tightening for AI infrastructure players, though. Elon Musk wrote on Oct. 25 that “debt markets have almost entirely shut off access to money” for firms without large non-AI revenue.

SK Hynix expects weaker demand from PC and smartphone makers because of higher memory prices and tight supply, but says AI infrastructure demand should offset the decline.