SK Hynix forecasts that its high-bandwidth memory (HBM) and DRAM supply will be nearly sold out by 2029. Following a record quarterly revenue surpassing 100 trillion won, the company expressed confidence in its competitiveness in the artificial intelligence (AI) memory market, as HBM4 production yields exceeded initial targets.
During a conference call on October 28, SK Hynix stated, "Considering the secured long-term agreement (LTA) volumes and ongoing discussions with clients, we anticipate that nearly all DRAM and HBM supply will be sold out over the next three years until 2029." The company added that the volumes under negotiation are highly likely to materialize based on specific customer purchasing plans, indicating a significant increase in medium- to long-term sales visibility.
CEO Kwak Noh-jung noted during the earnings call, "While we have achieved record results for six consecutive quarters, it is important to recognize that the business environment is changing. The trust we have built with customers through our technological competitiveness is leading to long-term contracts, enhancing our visibility for medium- to long-term demand and revenue stability."
Currently, SK Hynix has secured LTAs with 14 major clients, including large cloud service providers, covering more than 50% of its total production capacity for 2027 and 2028. The contracts typically span five years, with discussions for extensions ongoing with some clients.
The company also expressed confidence in its HBM technology. SK Hynix stated, "In the fourth quarter, HBM4 shipments and revenue share will surpass that of HBM3E. Production is proceeding smoothly, and both front-end and back-end yields are maintaining industry-leading levels." They added that HBM4 yields have exceeded initial plans, prompting an upward revision of targets.
Looking ahead, SK Hynix expects significant growth in HBM revenue and profits next year. The company addressed the potential adjustment in HBM stack counts requested by some clients, stating, "Current customer requests are double the supply we can provide," and emphasized that there are no changes to the medium- to long-term demand outlook and shipment plans. They anticipate improved profitability based on an increased share of HBM4, rising prices, and enhanced yields.
Fueled by the growing demand for AI memory, SK Hynix achieved record results. The company reported third-quarter revenue of 104.6155 trillion won and an operating profit of 83.3338 trillion won, with an operating profit margin of 80%. The strong performance was driven by increased sales of HBM4, server-grade DDR5, and a rise in enterprise solid-state drives (eSSD) based on 321-layer NAND.
SK Hynix predicts that the memory supply shortage will persist until 2030. As investments in AI data centers expand among global tech giants, the increasing technical complexity of semiconductor processes and the lengthy construction timelines for new production facilities are expected to hinder supply from keeping pace with demand.
The company noted, "The entities investing in AI are expanding from a few major tech firms to include general businesses and sovereign AI at the national level. Even if specific companies adjust their investment speeds, demand from other sectors can compensate for this shift." They forecast a memory demand growth rate of mid-20% for DRAM and high-10% for NAND, considering the supply available next year.
In response, SK Hynix plans to expand its domestic and international production infrastructure investments next year while flexibly increasing actual production capacity to meet demand. The company aims to expedite the construction schedule for new production facilities, such as the Yongin semiconductor cluster, and will gradually open clean rooms, adjusting the timing for equipment installation and mass production based on customer demand.
Additionally, SK Hynix is pursuing a total shareholder return of 100 trillion won this year. The board approved a cash dividend of 14 trillion won for the third quarter and a share buyback of 20 trillion won. The dividend includes a special payout reflecting the performance of its investment in Kioxia. CEO Kwak emphasized, "As our business grows and investment results accumulate, the benefits shared with our shareholders should also increase. We will continue to share the fruits of our growth through sustained performance."
* This article has been translated by AI.
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