SK Hynix Reports Q4 Profit and Plans for AI GPU Chips

South Korea's SK Hynix Inc., the world's second-largest memory chipmaker, announced a return to profitability in the fourth quarter of 2023. The company recorded an operating profit of 346 billion won ($259.8 million), significantly outperforming market expectations of a 192 billion won operating loss. This marks a stark contrast to the 1.9 trillion won loss reported in the same quarter a year earlier. The profit is attributed to a surge in revenue by 47%, driven by strong demand for AI-focused memory chips.

The company's focus has shifted towards high-end memory semiconductors, particularly those used in AI chipsets. SK Hynix's advanced DRAM chips, such as High Bandwidth Memory (HBM) chips, have seen increasing demand, especially in graphic processing units (GPUs) used for processing large amounts of data in generative AI. A significant achievement for SK Hynix in 2023 was the development of HBM3 chips, which it did ahead of its competitors. The sales of these chips increased more than fivefold from the previous year.

Looking forward, SK Hynix aims to start mass production of its next HBM version, HBM3E, in the first half of 2024, while also working on the development of the next-generation chip, HBM4. The company's technological leadership in the AI memory space has been a critical factor in its turnaround. Analysts predict that HBM chips will account for 15% of industry-wide DRAM sales in 2024, up from 8% in 2023.

Despite the positive earnings report, SK Hynix's shares experienced a 2.6% decline in afternoon trade, attributed to profit-taking by investors. The company's shares had surged 18% since its last quarterly earnings release, driven by the upbeat outlook for AI memory chips. Nonetheless, the wider market is expected to see improvement in chip prices as clients restock and manufacturers continue to cut legacy chip production.