SK Hynix profit tops forecast Samsung results, but shares dip on demand outlook
The logos of SK Hynix is seen at its headquarters in Seongnam · Reuters

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By Joyce Lee and Hyunjoo Jin

SEOUL (Reuters) -South Korea's SK Hynix forecast sales of its high-end semiconductors used in generative artificial intelligence chipsets would more than double this year, after reporting a quarterly profit record that beat a results estimate for rival Samsung.

Shares in SK Hynix, a key supplier to AI chip giant Nvidia, however, fell as much as 4.7% as the company warned of steeper demand declines in commodity memory chips used in smartphones and computers as Chinese competition grows. The shares have since recovered to trade down 0.2% at midday.

SK's factory investment plan for high-bandwidth memory (HBM) chips this year also underwhelmed investors, analysts said.

Before the result, SK Hynix shares had jumped about 30% this year on bullish sentiment driven by its business discussions with Nvidia, outperforming larger competitor Samsung, whose shares rose 2% over the same period.

"Uncertainties exist for the memory chip market this year as trade protectionism grows and geopolitical risks deepen, while PC and smartphone companies adjust inventories," SK Hynix Chief Financial Officer Kim Woo-hyun told analysts on an earnings call.

The company said supply will remain tight for high-performance chips as a result of rising demand, but demand declines will accelerate for legacy products.

Lee Min-hee, an analyst at BNK Investment & Securities, said while fourth-quarter results were strong, SK Hynix's forecast for first-quarter chip shipments was weaker than expected and disappointed investors.

"I had forecasted just above 6 trillion won operating profit for Q1, but now I'm expecting around 5.5 trillion won," Lee said.

SK Hynix said its shipments of DRAM and NAND flash memory chips would decline by between 10% and 20% in the first quarter from the previous quarter.

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The world's second-biggest memory chipmaker posted an operating profit of 8.1 trillion won ($5.64 billion) in the October-December quarter, slightly above expectations and exceeding Samsung's estimated fourth-quarter operating profit of 6.5 trillion won.

If the numbers hold, this would be the first time that SK Hynix's quarterly operating profit beat Samsung's total operating profit, analysts said, as its rival lags in supplying high-end high-bandwidth memory (HBM) chips to Nvidia.

SK Hynix said HBM chips accounted for 40% of its total DRAM revenue in the fourth quarter. Overall, its revenue for the quarter rose 75% year-on-year to 19.8 trillion won, while its operating profit was up more than 20-fold from a year earlier when it was coming out of the biggest chip industry downturn in over a decade.