SK Hynix, Accelerating Performance Improvement... Signaling Strengthened Position in HBM Market

Improved Q3 Performance Through High-Value D-RAM Products
"HBM to Grow Up to 80% Annually Over 5 Years"
Next Year’s Advanced Process Transition and Expanded HBM Investment

SK Hynix has returned to profitability in its DRAM segment in the third quarter, driven by high-value-added products including High Bandwidth Memory (HBM). With expectations rising for a performance recovery in the fourth quarter, an increase in earnings is anticipated next year due to a market recovery across all applications. SK Hynix plans to accelerate the transition to advanced process technology next year and increase investments to secure a competitive edge in the HBM market.

In the third quarter, SK Hynix reduced its losses compared to the previous quarter by increasing sales of key DRAM products such as HBM3 for artificial intelligence (AI), high-capacity Double Data Rate (DDR)5, and high-performance mobile DRAM. The DRAM bit growth (the production increase rate converted to bit units) rose about 20% from the previous quarter, and the average selling price (ASP) increased by 10%, resulting in a return to profitability in the DRAM segment after two quarters. NAND flash sales also increased, although the ASP slightly declined compared to the previous quarter.

SK Hynix noted that the semiconductor market is improving, with the DRAM and NAND markets recovering faster. As memory suppliers’ production cuts become more apparent in the second half of the year, memory demand is increasing among customers with reduced inventory. Product prices are also gradually stabilizing. The fixed transaction price of DRAM, a semiconductor market indicator, stopped declining last month. According to global market research firm DRAMeXchange, the average fixed transaction price last month for PC DRAM general-purpose products (DDR4 8Gb 1Gx8) was $1.30, the same as in August. Prices, which had been falling continuously since April, appear to have bottomed out and are showing signs of rebound.

For DRAM, the market outlook continues to improve due to the generative AI effect, with growth expected to be driven by HBM through next year. SK Hynix stated, "We expect the HBM market to grow at an annual average rate of 60-80% over the next five years," and "The share of HBM in the overall DRAM market is expected to rise to the mid-to-high teens percentage." They added, "The transition speed to HBM products is very fast, and this environment is advantageous for us through next year," and "We are continuing technical collaboration and capacity discussions with customers and partners."

The company expressed its commitment to continuing the trend of improving overall business performance. SK Hynix’s capital expenditure (CAPEX) last year was 19 trillion won, and it announced plans to reduce this by more than 50% this year compared to last year. Next year, CAPEX will increase compared to this year, but the increase will be minimized considering financial soundness. Instead, investment will be increased focusing on high-value-added products such as HBM, DDR5, and Low Power Double Data Rate (LPDDR)5 while accelerating the process transition. The process will shift mainly to DRAM 10nm 4th generation (1a) and 5th generation (1b), expanding investments in HBM and Through Silicon Via (TSV). TSV is an advanced packaging technology that drills thousands of tiny holes in DRAM chips to connect electrodes.

Kim Woo-hyun, Vice President and Chief Financial Officer (CFO) of SK Hynix, said, "Going forward, the company will create new markets different from before through products where it holds a global leadership position, such as HBM and DDR5," and "We will continue to strengthen our position as the number one supplier of high-performance premium memory."

Meanwhile, SK Hynix stated during the conference call that it does not agree with the merger between Japan’s Kioxia and the United States’ Western Digital. The company said, "We cannot disclose specific reasons or details about the merger process due to confidentiality agreements," but expressed its position on the issue for the first time. It also explained, "We have comprehensively considered the value of our investment in Kioxia," and "One thing is clear: we will make choices that benefit investors, Kioxia, and all stakeholders." SK Hynix holds indirect shares in Kioxia and thus has voting rights related to this merger.

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