SK hynix set a quarterly record with a 72% operating profit margin, far surpassing Taiwan Semiconductor Manufacturing Co., a key profitability benchmark in the chip industry, which posted a 58.1% margin. The company attributed the surge to expanded sales of high-bandwidth memory, or HBM, and a sharp rise in prices for commodity memory chips.
SK hynix said in a regulatory filing on the 23rd that it posted first-quarter revenue of 52.5763 trillion won, operating profit of 37.6103 trillion won and net profit of 40.3459 trillion won.
The operating margin of 72% topped the previous record of 58% in the fourth quarter of last year. The company said the figure means it earned more than 7,000 won in operating profit for every 10,000 won of products sold, a level rarely seen in manufacturing.
The margin gap with foundry leader TSMC widened sharply. In the fourth quarter of last year, SK hynix led TSMC, which had a 54% operating margin, by 4 percentage points. In the first quarter, the gap expanded to 14 percentage points, the company said.
Samsung Electronics, which released preliminary results earlier this month, reported a first-quarter operating margin of 43%. Its memory business is estimated to have posted margins in the 60% to 70% range, according to the report.
SK hynix has climbed steadily since hitting a low of minus 67% in operating margin in the first quarter of 2023. It turned positive at 3% in the fourth quarter of that year and has risen each quarter since, it said.
Quarterly revenue also topped 50 trillion won for the first time. Operating profit roughly doubled from the previous quarter, underscoring a sharp improvement in profitability.
The company said demand remained strong despite the seasonal off-peak period, as AI infrastructure investment expanded. It said it boosted sales of high-value products including HBM, high-capacity server DRAM modules and enterprise SSDs, or eSSDs. Analysts cited a steep jump in commodity DRAM prices as a major driver: first-quarter contract prices for commodity DRAM rose more than 90% from the previous quarter. HBM accounts for about 30% of SK hynix’s total DRAM shipments, with the remainder largely commodity products, the report said.
The earnings surge also strengthened the balance sheet. Cash and cash equivalents at the end of the first quarter rose 19.4 trillion won from the end of the previous quarter to 54.3 trillion won. Borrowings fell 2.9 trillion won to 19.3 trillion won, resulting in net cash of 35 trillion won, it said.
CEO Kwak Noh-jung said at last month’s shareholders meeting that “financial soundness that enables stable investment is essential” to respond to structural demand growth and maintain competitiveness, and he set a goal of securing more than 100 trillion won in net cash.
SK hynix said the uptrend could continue as memory demand broadens across DRAM and NAND with the evolution toward agentic AI, and as memory-efficiency technologies spread, improving AI service competitiveness and expanding overall service scale. On that basis, it expects favorable pricing conditions to persist for both DRAM and NAND.
The company said it will keep investing to strengthen future competitiveness. For HBM, it plans to enhance execution capabilities spanning performance, yield, quality and supply stability. In DRAM, it will expand supply of LPDDR6 using the world’s first 10-nanometer-class sixth-generation (1c) process, and ramp shipments of the 192-gigabyte SOCAMM2, which began mass production this month on the same process.
In NAND, it said it has begun supplying the consumer SSD, or cSSD, “PQC21,” which applies CTF-based 321-layer quad-level cell technology. It plans to respond flexibly to AI demand across the enterprise SSD market with a lineup spanning high-performance triple-level cell products and high-capacity QLC products. It also said it will strengthen competitiveness in AI data center and AI PC storage markets by leveraging synergies with Solidigm, where it has strengths in high-capacity QLC eSSDs.
SK hynix expects this year’s investment to rise significantly, with spending on infrastructure preparation such as the M15X ramp-up and the Yongin cluster, as well as securing key equipment including EUV tools.
“We will strategically expand our production base to proactively respond to mid- to long-term demand growth,” the company said, adding it will “secure both supply stability and financial soundness through investment that considers demand visibility.”
* This article has been translated by AI.
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