SK Hynix posted record quarterly revenue and operating profit. Shipments of next-generation high-bandwidth memory HBM4 ramped up, while prices for server DRAM and enterprise SSDs rose, increasing sales of high value-added data centre products. On that basis, it achieved quarterly revenue of more than 100 trillion won for the first time, and operating profit topped 88 trillion won. It also expanded long-term supply contracts with key customers, securing volumes beyond next year.

SK Hynix said on Oct. 28 it posted third-quarter revenue of 104.62 trillion won and operating profit of 83.33 trillion won. Revenue rose 327.9 percent from a year earlier and operating profit jumped 632.1 percent. The operating margin reached 80 percent.

The company said on a conference call that third-quarter DRAM performance was led by HBM4 and server DDR5. HBM is memory made by stacking multiple layers of DRAM and attaching it next to an AI accelerator, and it is priced higher than general DRAM. HBM4 increased mass production and shipments from the third quarter, and 12-layer products are also being shipped on the schedule agreed with key customers, it said. Yield exceeded plans, prompting it to raise its target. Sales volume of server DDR5 rose more than 40 percent from the previous quarter.

Park Sung-hwan (박성환), SK Hynix's chief financial officer, said, "As general DRAM prices stay strong and the sales share of HBM4, which is priced higher than previous products, expands, DRAM average selling prices recorded a high increase rate in the high 20 percent range, similar to the previous quarter."

In NAND, product mix, rather than shipment volume, determined results. SK Hynix said third-quarter NAND shipments slipped slightly from the previous quarter as it adjusted sales toward high value-added products such as 321-layer TLC eSSDs. Over the same period, NAND average selling prices rose in the mid-20 percent range on broad price strength and a higher share of SSDs.

The company said demand is increasing to store data accumulated during AI inference by distributing it across SSDs. Data centre products raised selling prices in both DRAM and NAND. It plans in the fourth quarter to increase the share of its core 321-layer process to more than half of domestic production capacity to expand eSSD supply.

The rise in selling prices translated into profit despite foreign exchange headwinds. With DRAM and NAND prices rising together, the operating profit growth rate outpaced the revenue growth rate. The operating margin was 80 percent, meaning it generated 80 won of operating profit for every 100 won in sales.

Memory is an export item traded in dollars, so when the won strengthens, profit converted into won decreases. Park said, "Despite an unfavourable foreign exchange impact from a stronger won, we set new record quarterly results in both operating profit and operating margin, driven by rising product prices and expanded sales focused on high value-added products."

Net profit moved in a different direction from operating profit. Third-quarter net profit fell from the previous quarter to 39.78 trillion won. Non-operating costs, including foreign exchange-related losses from the currency decline and valuation losses on investment assets, were reflected. The stronger won was seen as weighing on non-operating profit and loss following operating profit.

Even so, cash generated from the core business continued to build. Net cash increased to 98.7 trillion won as cash and cash equivalents rose and borrowings fell as of the end of the third quarter. That means funds for investment and shareholder returns increased even in a quarter when net profit declined.

"DRAM and HBM are effectively sold out until 2029"

The strong performance trend is expected to continue beyond next year. SK Hynix said it has signed long-term supply agreements with 14 key customers, including major global cloud service providers, and secured volumes account for more than 50 percent of total production capacity in 2027 and 2028.

The company said that, including volumes under discussion, DRAM and HBM volumes are effectively sold out through 2029. Park said, "The pricing structure basically reflects market conditions within the price range agreed with customers," adding, "We included practical performance mechanisms such as deposits so that customers' purchase plans can lead to actual orders and shipments."

SK Hynix will use improved demand visibility for both increased investment and shareholder returns. The company expected its investment size in 2027 to rise significantly from this year, including equipment investment for the first fab phase in Yongin. On concerns about oversupply, Park said, "Supply does not increase in direct proportion just because the investment scale or the number of new fabs increases," and said it would open cleanrooms at new fabs in stages.

Shareholder returns total about 100 trillion won for fiscal 2026. Cash dividends are at least 30 trillion won, and share buybacks and cancellations exceed 60 trillion won, including the 40 trillion won announced in August. It said the 40 trillion won announced in August was fully purchased last week and will be cancelled soon. The board on the day set the third-quarter dividend at 20,000 won per share, totalling 14 trillion won. That comprises 10,000 won reflecting improved performance plus a special dividend of 10,000 won to share Kioxia investment gains.

The board also approved a 20 trillion won share buyback. Excluding about 10 trillion won for employee compensation, shareholder returns for the third quarter total about 24 trillion won. Park said, "We will continue share buybacks and cancellations so that per-share value can appropriately reflect intrinsic value."

Kwak Noh-jung (곽노정), president of SK Hynix, who took part in the earnings announcement, said, "Customers' trust built through technological competitiveness has led to long-term contracts, increasing visibility into mid- to long-term demand and also creating conditions to secure stable profitability." He said, "The task ahead is to make this change into sustainable competitiveness."