DRAM and NAND Prices Rise Alongside Soaring Memory Demand
General Memory Demand Expands as Data Center Replacement Cycle Kicks In
HBM4 Shipments Imminent... The 'Semiconductor Supercycle' Accelerates
SK Hynix has achieved its highest-ever quarterly performance since its founding, fueled by the artificial intelligence (AI) boom. Explosive demand for high-performance memory has resulted not only from AI servers but also from replacement needs at existing data centers. Industry experts are now saying that the global semiconductor supercycle has entered full swing.
On October 29, SK Hynix announced its preliminary consolidated results for the third quarter of this year, reporting sales of 24.4489 trillion won, operating profit of 11.3834 trillion won, and net profit of 12.5975 trillion won.
Sales increased by 39.1% compared to the same period last year (17.5731 trillion won), while operating profit rose by 61.9% from 7.0303 trillion won. Net profit expanded by 119% to 5.7534 trillion won. The company recorded an operating margin of 47% and a net margin of 52%.
With these results, SK Hynix surpassed its previous quarter’s record (sales of 22.232 trillion won and operating profit of 9.2129 trillion won) in just one quarter. Both sales and operating profit exceeded market expectations of around 24 trillion won and 11 trillion won, respectively.
The company explained that a full-fledged rise in DRAM and NAND prices, along with a significant increase in shipments of high-performance products for AI servers, drove the strong performance. In particular, shipments of HBM3E (12-layer) and 128GB DDR5 more than doubled compared to the previous quarter, and the proportion of SSDs (solid-state drives) for AI servers also increased.
The expansion of AI infrastructure directly stimulated demand for SK Hynix’s high-performance memory. At the same time, the replacement cycle for equipment at existing data centers arrived, reviving the general memory market as well. According to the industry, the replacement cycle for data center servers is typically 5 to 10 years, and the convergence of aging equipment replacement and AI transition is causing global demand to surge. This has led to price increases not only for HBM but also for general memory such as DDR5 and eSSD.
As of the end of the third quarter, cash and cash equivalents stood at 27.9 trillion won, up 10.9 trillion won from the previous quarter. Debt decreased to 24.1 trillion won, so the company has shifted to a net cash position of 3.8 trillion won.
SK Hynix stated, "With the expansion of AI infrastructure investment, demand for memory across the board is surging," and added, "We have once again surpassed our all-time record performance through sales of high-performance products like HBM3E and DDR5."
The company has completed all negotiations with major customers regarding HBM supply for next year and plans to begin shipping HBM4 from the fourth quarter, with full-scale sales to follow next year. The sixth-generation HBM4, which completed development in September, was designed to meet all customer performance requirements and support the industry’s highest speeds.
In the DRAM segment, the company is accelerating the transition to the most advanced 10-nanometer-class sixth-generation (1c) process to strengthen its full product lineup for servers, mobile devices, and graphics. In the NAND segment, it is expanding supply of TLC and QLC products based on the world’s highest 321-layer architecture.
To respond to rising AI memory demand, SK Hynix has begun early operation of the cleanroom at its Cheongju M15X plant and started bringing in equipment, with next year’s investment scale set to increase compared to this year.
Chief Financial Officer Kim Woohyun said, "The memory market is entering a new phase thanks to AI technology innovation," adding, "We will further strengthen our leadership in AI memory based on market-leading products and differentiated technological competitiveness."
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