By Heekyong Yang and Joyce Lee
SEOUL, April 23 (Reuters) – South Korea’s SK Hynix posted a more than five-fold jump in first-quarter operating profit to a record high on Thursday, as the artificial intelligence boom drove strong demand for both advanced and conventional memory chip products.
The strong results underscore continued momentum in the global memory chip market, as demand from Big Tech companies to build AI data centres has constrained chip supplies and pushed up prices of both high-end and commodity memory chips.
“As AI evolves from large model training to the stage of agentic AI, which repeatedly performs real-time inference across various service environments, the foundation for memory demand is expanding across both DRAM and NAND flash,” SK Hynix said in a statement.
Contract prices for certain DRAM chips jumped nearly 83% in the first quarter from the previous quarter, while prices for some NAND products soared around 160%, according to data from market tracker TrendForce. It expects memory chip prices to rise further in the current quarter, signaling another quarter of robust earnings growth, as AI firms race to secure advanced chips needed for their infrastructure rollouts.
Some analysts expect the pace of price increases to ease after the second quarter, but constrained supply will continue until new production capacity comes online, which can take more than a year after construction begins.
SK Hynix said it expects a favourable pricing environment to continue “for the time being,” as AI-driven demand offsets softer chip demand from PC and smartphone makers.
Chey Tae-won, chairman of its parent group SK Group, said last month that the global chip wafer shortage is likely to persist until 2030, as demand driven by AI continues to outpace supply.
SK Hynix said earlier it is accelerating capacity expansion, including bringing forward the opening of a new memory chip plant in South Korea to meet surging demand.
The memory chip maker said this year’s investment will rise significantly from last year’s 30.2 trillion won, with focus on building infrastructure at the Yongin Cluster, ramping up the M15X fab, and securing key equipment such as EUVs.
In March, SK Hynix said it would purchase 11.95 trillion won worth of EUV lithography tools from ASML by 2027.
The company added that it is actively reviewing additional shareholder return measures, including dividends, share buybacks and cancellations, and aims to finalise implementation plans within the year.
Shares in SK Hynix have jumped nearly 90% so far this year, with its market value climbing to around $590 billion, surpassing chip equipment maker ASML’s $570 billion, Europe’s most valuable company.
The Nvidia supplier reported a 37.6 trillion won ($25.42 billion) operating profit for the January-March period, up from 7.4 trillion won a year earlier.
That was in line with a 37.9 trillion won forecast by LSEG SmartEstimate, which is weighted toward analysts who are more consistently accurate.
Quarterly revenue rose 198% to 52.6 trillion won.
Shares of SK Hynix were trading up 2.1% in morning trade, compared with the benchmark KOSPI’s 1.2% rise.
($1 = 1,478.8600 won)
(Reporting by Heekyong Yang and Joyce Lee; Editing by Miyoung Kim and Lincoln Feast)
