(Bloomberg) — SK Hynix Inc. said it expects a full recovery in the memory market after demand for AI prompted the chipmaker to post its fastest pace of revenue expansion since at least 2010 .
Most read on Bloomberg
Sales at the world’s second-largest memory maker more than doubled to a higher-than-expected 12.4 trillion won ($9 billion) in the March quarter. Operating profit came in at 2.89 trillion won, far surpassing estimates of a profit of 1.8 trillion won. This is the second highest first quarter operating profit on record.
The company said it has entered a rebound phase, with the overall memory market on a steady growth trajectory. Capital spending this year will be “somewhat” higher than expected, he said. SK Hynix plans to increase the supply of its cutting-edge HBM3E chips and attract more customers, it said in an earnings release on Thursday.
“This is a clear turnaround and the start of a record year for SK Hynix,” said Tom Kang, director of Counterpoint Research, adding that he expects the company to reach a figure of business of nearly 61 trillion won and a profit margin of more than 20 trillion won. % This year. SK Hynix’s HBM capacity is fully booked for this year and the company needs new factories to meet demand, he said.
The Icheon, South Korea-based company released its report days after Texas Instruments Inc. gave bullish revenue forecasts for the current quarter, indicating that a decline in demand for industrial and automotive components could subside. Preliminary operating profit at bigger rival Samsung Electronics Co. showed a sharp rebound in the first quarter, while Micron Technology Inc. also gave strong sales forecasts last month.
SK Hynix, which became South Korea’s second-most valuable company in December, is the leader in high-bandwidth memory that works alongside Nvidia Corp.’s AI accelerators. Earlier this week, the company announced plans to invest some $15 billion in South Korea to meet the rapidly growing demand for these high-end chips, which is expected to grow 60% annually.
The spending underscores the extent to which the company is engaged in a global race to supply components critical to creating generative AI services. The rise of artificial intelligence is also helping to boost the market as a whole. Shares of SK Hynix have gained 27% this year as investors bet that AI and a recovery in global IT spending will lift the memory market out of a years-long slump.
Strong demand for AI server products is helping to drive up DRAM prices, while demand for enterprise SSDs has helped NAND see a “significant turnaround,” the company said.
Read more: SK Hynix CEO predicts HBM tight supply extending into 2025
–With the help of Vlad Savov.
(Updates with analyst comments and earnings release statement)
Most read from Bloomberg Businessweek
©2024 Bloomberg LP
