SK Hynix to Announce Q3 Earnings Tomorrow... Focus on HBM Impact

Operating Loss Expected to Decrease by Over 1 Trillion Won
Will HBM Business Expansion Reduce Deficit?
DRAM Performance Expected to Turn Profitable in Q3

SK Hynix will announce its third-quarter earnings on the 26th. Amid widespread assessments that the memory semiconductor market has hit bottom, the industry is closely watching how much SK Hynix has improved its performance. There are also expectations that SK Hynix may have turned a profit in the DRAM segment due to increased demand for high-value-added DRAM products such as High Bandwidth Memory (HBM).

On the 25th, the semiconductor industry forecasted that SK Hynix would record better results in the third quarter compared to the first half of the year. According to the average earnings forecasts from securities firms compiled by financial information provider FnGuide, sales are expected to be 8.0719 trillion KRW, with an operating loss of 1.6515 trillion KRW. In this case, sales would decrease by 26.50% year-on-year but increase by 58.64% quarter-on-quarter. The scale of operating losses would also shrink by more than 1 trillion KRW compared to the previous quarter (2.8821 trillion KRW).

This is due to production cuts across the memory industry, including SK Hynix, and increased demand for DRAM centered on high-value-added products. In fact, the market is showing positive changes such as reduced DRAM inventory and rising prices for some products. Market research firm TrendForce reported in an analysis of DRAM fixed transaction prices (contract prices between companies) that the price of PC Double Data Rate (DDR) 5 DRAM modules rose by 0.7% in July compared to the previous month and has since remained stable.

In particular, SK Hynix may benefit significantly from the increased demand for HBM, a memory used for artificial intelligence (AI). The company is expanding related sales by supplying the U.S. company Nvidia with third-generation HBM (HBM2E) followed by fourth-generation HBM (HBM3) products. The proportion of graphics DRAM (including HBM) in SK Hynix’s total DRAM sales was 22% in the second quarter, up from 14% in the previous quarter.

The market expects that this effect could lead to SK Hynix’s DRAM performance turning profitable in the third quarter. Hana Securities estimated that SK Hynix recorded an operating profit of 668 billion KRW in the DRAM business in the third quarter, escaping losses unlike in the first quarter (-1.433 trillion KRW) and second quarter (-326 billion KRW). Minhee Lee, a researcher at BNK Investment & Securities, said, "DRAM is expected to turn profitable due to strong shipments and rising average selling prices (ASP)."

Meanwhile, attention is focused on whether SK Hynix will express its views regarding the merger between Japan’s Kioxia and the U.S.’s Western Digital during the third-quarter earnings announcement. Currently, Kioxia and Western Digital are in the final stages of preparations for management integration. It is expected that Kioxia will take charge of actual management. SK Hynix invested about 4 trillion KRW in 2018 in the Korea-Japan-U.S. consortium, the largest shareholder of Kioxia, and holds voting rights related to this merger.

This content was produced with the assistance of AI translation services.