SK Hynix Reports Q4 Profit and Plans for AI GPU Chips

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South Korea’s SK Hynix Inc., the world’s second-largest memory chip maker, announced return to profitability in the fourth quarter of 2023. The company posted an operating profit of 346 billion won ($259.8 million), well above market expectations for an operating loss of 192 billion won. That marked a sharp contrast to the 1.9 trillion won loss reported in the same quarter a year earlier. The profit was driven by a 47% jump in revenue, driven by strong demand for AI-focused memory chips.

The company’s focus has shifted to high-end memory semiconductors, especially those used in AI chipsets. SK Hynix’s advanced DRAM chips, such as high-bandwidth memory (HBM) chips, are in growing demand, especially in graphics processing units (GPUs) used to process 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. Sales of these chips increased more than fivefold over the previous year.

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

Despite the positive earnings report, shares of SK Hynix fell 2.6 percent in afternoon trade as investors took profit. The company’s shares rose 18% after its latest quarterly earnings report, driven by an upbeat outlook for artificial intelligence memory chips. However, the broader market is expected to see an improvement in chip prices as customers restock and manufacturers continue to reduce production of legacy chips.

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