- SK Hynix posted record Q3 revenue of 104.6 trillion won (~$78 billion), up 328% year-over-year, with an operating margin of 80%.
- The company says memory demand will outpace supply through 2030, with DRAM and HBM volumes through 2029 effectively sold out.
- Long-term agreements covering over 50% of its 2027-2028 capacity have been signed with 14 key customers, including major cloud providers.
SK Hynix reported record third-quarter results on Wednesday, with revenue of 104.6 trillion won ($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%, resulting in an 80% operating margin, meaning the company kept about 80 won of profit 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% year-over-year but down 58% from the second quarter. CFO Kim Woo-hyun attributed the gap to net non-operating expenses of 32.6 trillion won, 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, with its DRAM and HBM volumes through 2029 effectively sold out. DRAM is standard memory in servers, phones, and PCs, while high-bandwidth memory (HBM) is the stacked memory beside AI processors.
“Given the complexities involved in implementing leading-edge processes and the lead times required to construct new production facilities, a situation where supply cannot keep up with demand is expected to persist for some time,” Kim Woo-hyun said.
The company noted that some customers have recently adjusted HBM specifications, which it reads as proof of overwhelming demand. “Demand remains so strong that customers’ volume requirement is more than double that of what we can supply today,” the company stated.
To lock in demand, SK Hynix has signed long-term agreements with 14 key customers, including leading cloud providers, covering more than 50% of its 2027 and 2028 production capacity. These five-year contracts include price ranges and deposits as safeguards.
CEO Kwak Noh-Jung addressed AI monetization concerns, noting major cloud customers reported year-over-year revenue growth of 30% to 80% and order backlogs up two-fold to five-fold. He added that AI spending is broadening to non-tech firms, sovereign AI projects, and on-prem setups.
Meanwhile, financing is tightening for AI infrastructure players, with Elon Musk writing 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 due to higher prices, but says AI infrastructure demand should offset the decline.
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