SK Hynix Q3 Profit Surges 62% to Record High, Driven by Nvidia Demand

South Korea’s SK Hynix on Wednesday announced record-breaking quarterly revenue and profit, driven by surging demand for its high bandwidth memory (HBM) solutions, a critical component in generative AI chipsets. The company’s strategic focus on HBM has positioned it as a key player in the burgeoning AI infrastructure market.

Looking ahead, SK Hynix plans to significantly expand its production capacity in 2026, capitalizing on the sustained demand. Notably, its projected supply of memory products for 2026 is already fully committed, signaling strong customer confidence and market anticipation.

Here’s a look at SK Hynix’s third-quarter performance against LSEG SmartEstimates:

• Revenue: 24.45 trillion won ($17.13 billion) vs. 24.73 trillion won
• Operating profit: 11.38 trillion won vs. 11.39 trillion won

Compared to the same period last year, revenue jumped approximately 39% in the September quarter, while operating profit soared 62%. On a sequential basis, revenue increased by 10%, and operating profit climbed by 24%. SK Hynix highlighted in its earnings release that its quarterly operating profit exceeded 10 trillion won for the first time in company history, a testament to the impact of its HBM leadership.

Following the positive earnings report, SK Hynix shares experienced a nearly 5% surge in South Korea, extending its year-to-date stock rally beyond 210%. This robust stock performance reflects investor optimism regarding the company’s growth trajectory and its pivotal role in the AI-driven memory market.

SK Hynix specializes in manufacturing memory chips used for data storage across a wide range of applications, from enterprise servers to consumer devices. The company has strategically leveraged the AI boom, emerging as a leading supplier of HBM chips, essential for powering high-performance AI data center servers. This has resulted in significant revenue growth and increased profitability.

“As demand across the memory segment has soared due to customers’ expanding investments in AI infrastructure, SK Hynix once again surpassed the record-high performance of the previous quarter due to increased sales of high value-added products,” SK Hynix said in a statement.

HBM falls under the umbrella of dynamic random access memory, or DRAM, a type of semiconductor memory crucial for storing data and program code in PCs, workstations, and servers. The architecture of HBM allows for higher bandwidth and lower power consumption compared to traditional DRAM, making it ideally suited for demanding AI workloads.

The company stated that it plans to start supplying its next-generation HBM4 chips in the current quarter, following ongoing negotiations with key customers. The HBM4 represents the sixth generation of HBM technology, pushing performance and power efficiency further. This highlights SK Hynix’s commitment to innovation and its ability to stay ahead in the rapidly evolving memory technology landscape.

During the earnings call, an SK Hynix executive emphasized that the company’s HBM products have been consistently selling out since 2023, with HBM supply expected to remain constrained relative to demand through 2027 as production scales up. This sustained demand reflects the increasing adoption of AI and the critical role of HBM in enabling these applications.

SK Hynix has carved out a unique position in the DRAM market by securing an early lead in HBM technology. It has successfully established itself as the primary HBM supplier to Nvidia, the dominant AI chip designer. This close collaboration has allowed SK Hynix to optimize its HBM solutions for Nvidia’s GPUs, further solidifying its leadership position.

However, competitors such as U.S.-based Micron and South Korean tech giant Samsung are actively pursuing inroads into the HBM market. Intense competition is expected as these companies ramp up their HBM production and develop their next-generation technologies.

Micron has already begun supplying Nvidia with portions of its HBM technology, marking a significant step forward in its HBM market penetration. Samsung recently cleared Nvidia’s qualification tests for an advanced HBM product, suggesting they are poised to capture a larger share of the HBM market .

“With the innovation of AI technology, the memory market has shifted to a new paradigm and demand has begun to spread to all product areas,” said SK Hynix Chief Financial Officer Kim Woohyun in the earnings release.

“We will continue to strengthen our AI memory leadership by responding to customer demand through market-leading products and differentiated technological capabilities,” he added. This commitment to innovation and responsiveness will be crucial for maintaining its edge.

The HBM market is predicted to experience continued expansion in the coming years, reaching an estimated $43 billion by 2027. This growth trajectory presents significant earnings leverage for memory manufacturers, with SK Hynix particularly well-positioned to capitalize on this trend, according to MS Hwang, research director at Counterpoint Research.

“[F]or SK Hynix to continue generating profits, it’ll be important for the company to maintain and enhance its competitive edge,” he added, emphasizing the ongoing need for technological leadership and market responsiveness.

A report from Counterpoint Research earlier this month revealed that SK Hynix held a leading 38% share of the DRAM market by revenue in the second quarter, increasing its shares after surpassing Samsung in the first quarter. This consistent performance underscores SK Hynix’s strategic execution and its ability to capitalize on market opportunities.

The report further highlighted a 178% year-over-year growth in the global HBM market during the second quarter, with SK Hynix dominating the space with a 64% share, underscoring its strong market position, although those numbers do fluctuate from quarter to quarter due to supply and demand, as well as technological advantages. Samsung will report its earnings on Thursday, likely providing more insight into the dynamics of the memory market.

Ray Wang, lead semiconductor analyst at Futurum Group, anticipates SK Hynix will preserve its dominant leadership in the HBM market throughout the following year. This projection is fueled by the company’s technological advantage and its established relationships with key customers.

“The company is likely to sustain around 60% global HBM market share, underpinned by its position as the primary supplier to key customers such as Nvidia, Google and other leading customers,” he added. The ability to nurture these relationships and to continue delivering cutting-edge technology will be critical to SK Hynix’s sustained success.