On Thursday (July 25th), SK Hynix, the world's second-largest storage chip manufacturer, announced its second quarter financial report. According to financial reports, the company achieved its highest quarterly profit performance since 2018 in the second quarter of this year, driven by strong demand for HBM chips in the AI boom.
This is also the third consecutive quarter that SK Hynix has achieved profitability after last year's loss. SK Hynix predicts that the demand for artificial intelligence chips, especially HBM chips, will further increase in the second half of the year.
However, despite delivering this strong performance report, SK Hynix's stock price suffered a heavy blow today due to the sell-off of US technology stocks last night. As of press time, SK Hynix has plummeted 8.44% in the Korean stock market.
SK Hynix's stock price trend since the beginning of the year
Best quarterly profit performance in six years
As a major supplier of Nvidia HBM chips, SK Hynix has been thriving in this AI craze. According to the financial report,
The company achieved an operating profit of KRW 5.46 trillion (approximately USD 3.95 billion) in the second quarter, compared to a loss of KRW 2.88 trillion in the same period last year. This is SK Hynix's best quarterly operating profit after KRW 6.47 trillion in the third quarter of 2018.
The company's revenue surged 124.8% in the second quarter, reaching a record high of 16.42 trillion Korean won;
Net profit reached 4.12 trillion Korean won, compared to a loss of 2.98 trillion Korean won in the same period last year.
The company will further consolidate its position as a leader in artificial intelligence memory products, "said Chief Financial Officer Kim Woohyun in a statement.
Leading the HBM competition
Under the wave of artificial intelligence, the market's demand for high-end DRAM chips such as HBM, as well as chips used for artificial intelligence services on data center servers and operating equipment, has surged, driving up chip prices.
Currently, Nvidia holds an 80% market share in the artificial intelligence chip market. As Nvidia's main HBM supplier, SK Hynix competes with American rivals Micron and South Korean giant Samsung Electronics in the HBM market.
At present, SK Hynix is clearly at the forefront of the race track. According to sources, SK Hynix began mass producing the fifth generation HBM chip, named HBM3E, in March this year and has already shipped the first batch to Nvidia.
In May of this year, Kwak Noh Jung, the president of SK Hynix, revealed that the HBM chips of SK Hynix have been sold out this year, and almost all HBM chips for 2025 have been pre ordered.
New Korea Securities stated that as Nvidia is expected to accelerate its plans for the next generation of GPUs to meet the soaring demand brought about by the artificial intelligence boom, HBMs may account for 20% of SK Hynix's DRAM chip profits by the end of 2024.
Is the popularity of AI chip stocks starting to decline?
However, after delivering this strong financial report, SK Hynix's stock price suffered a heavy blow on Thursday.
After the opening on Thursday, SK Hynix's stock price plummeted immediately, and as of press time, the decline has expanded to 8.44%, marking the largest intraday decline since November 2022.
Previously, US technology stocks generally fell, especially Nvidia, which fell 6.8%, indicating that investors have become uneasy about the overvaluation of AI related companies. Despite the sharp drop on Thursday, SK Hynix still has a cumulative increase of 35.4% since the beginning of the year.
People are increasingly concerned that unless companies like Microsoft and Alphabet can generate substantial revenue from their massive investments, spending on artificial intelligence and data centers will slow down.
This week, Morgan Stanley removed artificial intelligence chip industry stocks such as SK Hynix and TSMC from its watchlist and warned that it may be time to take a break.