SK Hynix forecasts that its high-bandwidth memory (HBM) and DRAM supply will be nearly sold out through 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, the company stated, "Considering the secured long-term agreements (LTA) 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." They added, "The quantities under negotiation are highly likely to materialize based on specific customer purchasing plans, significantly enhancing our medium- to long-term sales visibility."
SK Hynix CEO Kwak Noh-jung noted during the earnings call, "While we have achieved record results for six consecutive quarters, it is crucial to recognize that the business environment is changing." He emphasized that the trust built through technological competitiveness is leading to long-term contracts, thereby increasing visibility of medium- to long-term demand and revenue stability.
Currently, the company has secured LTAs with 14 major clients, including global 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 HBM3E, with production proceeding smoothly and both front-end and back-end yields maintaining industry-leading levels." They added that HBM4 yields have exceeded initial plans, prompting an upward revision of targets.
The company anticipates significant growth in HBM revenue and profits next year. Regarding potential adjustments in HBM stacking levels by some clients, they noted, "Current customer requests are double the supply capacity," asserting that there will be no changes to medium- to long-term demand forecasts and shipment plans. They expect profitability to improve based on the increased share of HBM4, rising prices, and enhanced yields.
Fueled by the growing demand for AI memory, SK Hynix achieved record results. The company's third-quarter revenue reached 104.6155 trillion won, with an operating profit of 83.3338 trillion won, resulting in an operating profit margin of 80%. The strong performance was driven by increased sales of HBM4 and server-grade DDR5, along with a rise in enterprise solid-state drive (eSSD) supplies 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 major global tech firms, the increasing technical complexity of semiconductor processes and the lengthy construction timelines for new production facilities are expected to hinder supply growth from keeping pace with demand.
The company explained, "The entities investing in AI are expanding from a few major tech firms to include general businesses and sovereign AI at the national level." They noted that even if specific companies adjust their investment speeds, demand from other sectors can compensate, indicating a structural shift. For next year, they project memory demand growth rates of mid-20% for DRAM and high-10% for NAND, considering available supply.
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. They aim to expedite the construction schedule for new production facilities, such as the Yongin semiconductor cluster, and will gradually open clean rooms, adjusting equipment installation and mass production timelines based on customer demand.
Additionally, SK Hynix is pursuing a total shareholder return of 100 trillion won this year. The board of directors approved a cash dividend of 14 trillion won and a share buyback of 20 trillion won for the third quarter. The dividend includes a special payout reflecting the performance of its investment in Kioxia. CEO Kwak emphasized, "As business growth and investment results accumulate, the returns shared with shareholders should also grow," committing to sharing the fruits of ongoing performance with shareholders.
* This article has been translated by AI.
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