SK hynix’s first-quarter earnings beat pushed its operating margin into the 70% range, outpacing Taiwan Semiconductor Manufacturing Co. as well as Nvidia and Apple, the company said. The strong growth cycle is likely to continue for now.
SK hynix reported an operating profit margin of 72% for the first quarter, it disclosed on April 23. That topped its previous record of 58% in the fourth quarter of last year. The figure implies more than 7,000 won in operating profit for every 10,000 won in sales, an unusually high level for a manufacturer.
Among semiconductor companies, it ranked first by a wide margin. Samsung Electronics posted a 43% operating margin in the first quarter; its memory business alone is estimated to be in the 60% range. The gap with TSMC, the world’s top foundry, also widened. Based on last year’s fourth quarter, SK hynix led TSMC (54%) by 4 percentage points, but the difference has since grown to 14 points. Nvidia’s operating margin is 65%, and Apple’s is about 48%, the report said.
Profitability rose as sales of high-value high-bandwidth memory, or HBM, expanded and prices for other memory chips such as commodity DRAM and NAND flash surged. HBM accounts for 30% of SK hynix’s total DRAM shipments, with the rest in commodity products. By revenue, DRAM made up 78% and NAND flash 21%. With semiconductor demand jumping, first-quarter DRAM selling prices rose more than 60% from the previous quarter, while NAND flash average selling prices increased in the mid-70% range.
The earnings strength also improved the balance sheet. Cash and cash equivalents at the end of the first quarter rose 19.4 trillion won from the end of the previous quarter to 54.3 trillion won. Borrowings fell 2.9 trillion won to 19.3 trillion won, lifting net cash to 35 trillion won.
The company aims to build net cash of more than 100 trillion won, with most of it to be used to raise utilization at its M15X facility, build infrastructure for the Yongin cluster, and secure key equipment such as extreme ultraviolet, or EUV, tools.
The first-quarter beat, despite a seasonally weak period, has also raised expectations for the second half. If mass production of sixth-generation HBM4 ramps up in the second half, the company’s annual results and profitability metrics could climb further, the report said. Some brokerages forecast annual revenue of 300 trillion won and operating profit exceeding 230 trillion won.
Kim Woo-hyun, SK hynix chief financial officer, said on the company’s first-quarter earnings conference call that memory demand from major customers has expanded to HBM, server DRAM and enterprise SSDs, but manufacturers cannot quickly increase supply. “As this supply shortage continues, there is a high possibility that the memory price upcycle will be prolonged,” he said.
The company said the current rise in memory prices reflects structural changes such as a broad AI shift, suggesting the supply-demand imbalance could persist and prices could keep rising.
* This article has been translated by AI.
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