SK hynix Q1 Operating Margin Jumps to 72% on HBM Boom and Surging Memory Prices

SK hynix, which posted a first-quarter earnings surprise, said its operating margin surged into the 70% range, outpacing Taiwan Semiconductor Manufacturing Co. as well as Nvidia and Apple. The company’s strong growth phase is likely to continue for some time. 

In a filing on the 23rd, SK hynix reported a first-quarter operating margin of 72%, far above its previous record of 58% in the fourth quarter of last year. That means it kept more than 7,000 won in operating profit for every 10,000 won in sales, an unusually high level for a manufacturer. 

The figure put SK hynix at the top among chipmakers. Samsung Electronics’ first-quarter operating margin was 43%, and its memory business alone is estimated to be in the 60% range. The gap with the world’s No. 1 foundry, TSMC, also widened. In the fourth quarter of last year, SK hynix led TSMC’s 54% margin by 4 percentage points; the difference has now grown to 14 points. Nvidia’s operating margin is 65%, while Apple’s is about 48%. 

Profitability was boosted by expanding sales of high-value high-bandwidth memory, or HBM, and by sharp price increases for other memory chips such as commodity DRAM and NAND flash. HBM accounts for 30% of SK hynix’s total DRAM shipments, with the rest made up of commodity products. DRAM represented 78% of revenue and NAND flash 21%. As demand surged, first-quarter DRAM selling prices rose more than 60% from the previous quarter, while NAND flash prices climbed in the mid-70% range. 

The earnings strength also improved 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, lifting net cash to 35 trillion won. 

The company said it aims to secure more than 100 trillion won in net cash, with most of it to be used to raise utilization at M15X, build infrastructure for the Yongin cluster, and secure key equipment such as extreme ultraviolet, or EUV, tools.  

Despite a seasonally weak period, the company’s earnings surprise raised expectations for the second half. If mass production of sixth-generation HBM4 ramps up in the second half, annual results and profitability indicators are expected to rise further. Some brokerages forecast annual revenue of 300 trillion won and operating profit exceeding 230 trillion won. 

Kim Woo-hyun SK hynix’s chief financial officer said on a first-quarter earnings conference call that memory demand from major customers has expanded to HBM, server DRAM and enterprise SSDs, but producers cannot quickly increase supply. "As this supply shortage continues, there is a high possibility that the memory price upcycle will be prolonged," he said.

He said the current rise in memory prices reflects structural changes such as a broad AI shift, meaning the supply-demand imbalance could persist and prices could keep climbing.