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Published on
January 23, 2025
5 min read
SK Hynix Shares Drop 2.7% Despite Soaring Quarter 4 Profits
Stocks of South Korea’s SK Hynix have dropped by 2.7% despite the strong quarter four earnings reported by the company on January 23. SK Hynix is one of the biggest global manufacturers of memory chips. According to CNBC, SK Hynix’s profit soared due to increased sales of high bandwidth memory that’s used in generative AI chipsets.
Riding the AI Boom
SK Hynix quarterly profit rose by 2,236% year-on-year. The company’s revenue rose by 12% on a quarter-on-quarter basis. The company reported a 75% rise in sales revenue for the quarter ending December and a 15% growth in operating profit.
SK Hynix rode the AI boom to record high sales as demand for AI servers rose. The South Korean chip manufacturer is one of Nvidia’s top suppliers.
“With prolonged strong demand for AI memory, the company achieved [an] all-time high result through world-leading HBM technology and profitability-oriented operation,” SK Hynix said in a statement.
HBM is a dynamic random access memory where chips are stacked vertically to increase power efficiency and save space. Samsung Electronics and Micron Technology are the other major players in HBM technology.
SK Hynix closed the year strong with record high annual revenue. The 2024 quarter four revenues surpassed the 2022 high by more than 21 trillion won. Operating profits for quarter four also exceeded the 2018 record when there was a boom in the semiconductor industry.
2025 Outlook
When releasing quarter four reports, the management of chip maker said that it could note a slight rise in capital spending in 2025 compared to the prior year. The company also noted uncertainty in demand this year and forecasts that growth in HBM sales and other dynamic random access memory products will continue as big techs continue to invest in AI servers.
The demand will also grow as training of AI models continues to gain traction. In the medium term, SK Hynix expects the consumer market for AI-powered smartphones and personal computers to expand. The company expects sales of these products to pick up in the second half of 2025.
“The Memory industry is transitioning from a commodity market driven by volume and price to a customized market focused on high performance and high quality products. All in all, this year, DRAM demand is projected to grow by a mid to high teen percentage, while NAND demand is expected to increase by a low teen percentage,” Kim said in the earnings call.
Even with the positive outlook, SK Hynix CFO Kim Woohyun warned that 2025’s outlook of memory chip demand remains clouded. This is due to inventory adjustments by companies that make smartphones and personal computers. Risks posed by geopolitics and protective trade policies have also affected memory chip demand.
Maintaining Leadership
SK Hynix produces another type of memory chip known as NAND. This chip works well with dynamic random access memory in servers, smartphones, and personal computers. While noting that SK Hynix’s quarter four earnings were robust, its possible that investors could be concerned about the market for this product getting to an adjustment period. However, they say the South Korean chip manufacturer will continue to lead in the HBM technology space. This year alone, SK Hynix stocks have risen by 29%.
