SK hynix posts record Q3 profit on AI memory demand, plans over 100 trillion-won return

Operating profit rose 557.2 percent from a year earlier to 83.33 trillion won in the July-September period, and revenue jumped 327.9 percent to 104.61 trillion won, according to the company's regulatory filing. Net profit reached a record 39.77 trillion won, up 215.7 percent. The company said it posted record quarterly revenue and operating profit for six consecutive quarters since the second quarter of last year.

SK hynix said prices of key products rose as AI memory demand grew, and high-value-added products drove the results. "Amid market conditions in which prices of key products rose on growing demand for artificial intelligence (AI) memory, the company once again achieved record quarterly revenue and operating profit, driven by its competitiveness in high-value-added products," it said. "Building on these favorable conditions, we will accelerate efforts to expand production capacity and strengthen product competitiveness to sustain our current growth momentum."

The company has become one of the biggest beneficiaries of the AI supercycle, supplying HBM chips to Nvidia Corp. while capitalizing on soaring prices of conventional memory chips. Its operating profit margin exceeded 80 percent in the third quarter, setting a record and reflecting tight supply conditions. "Virtually all of our DRAM and HBM production capacity for the next three years through 2029 has already been sold out," SK hynix said during a conference call. It said the outlook reflects volumes secured under long-term agreements and demand under detailed discussion with customers, and that a structural imbalance between chip supply and demand is expected to persist for the time being. The company said the memory supply shortage is expected to persist through 2030 amid expanding investment in AI infrastructure, and that its sixth-generation HBM4 chips will become its main product starting in the fourth quarter.

The latest results came amid renewed concerns that semiconductor demand may have peaked, fueled by questions over the profitability of AI investments. SK hynix said it expects the momentum behind AI investment to continue as the financial burden of AI investments on major customers eases.

SK hynix also announced an additional plan to return 60 trillion won to shareholders, following the completion of a 40 trillion-won shareholder return program last week. Of the more than 100 trillion won in planned shareholder returns for 2026, cash dividends will account for more than 30 trillion won, the company said. It said it would determine dividend payments based on operating performance, provide additional returns through special dividends when it realizes substantial investment gains and continue share buybacks every quarter. SK hynix also plans to return most of its realized gains from its investment in Japan's Kioxia Corp. through a special dividend, with payments scheduled for the third quarter and the end of the fiscal year. SK hynix is a major investor in Kioxia, a Japanese NAND flash memory manufacturer, through a Korean-U.S.-Japanese consortium led by Bain Capital.

The announcement follows the company's decision Friday to suspend plans to list its U.S. subsidiary, Solidigm, citing market conditions. Reports have circulated that Solidigm was considering an initial public offering in the United States as early as next year, potentially valuing the subsidiary at up to US$150 billion. The decision came amid strong shareholder opposition and regulatory scrutiny over concerns that a separate listing could undermine the interests of minority shareholders. SK hynix shares had faced sharp downward pressure, falling nearly 30 percent over the three months following the announcement of its second-quarter earnings.

Seoul stocks opened sharply higher Wednesday after the earnings, tracking overnight gains on Wall Street. The KOSPI rose 125.51 points, or 2.23 percent, to 5,763.85 at the opening bell, following the previous session's more than 3 percent rally. At 9:15 a.m., the index was up 183.73 points, or 3.26 percent, at 5,822.07. Overnight, the Nasdaq Composite climbed 1.18 percent and the Philadelphia Semiconductor Index jumped 3.6 percent.

A Yonhap market report put SK hynix's third-quarter operating profit increase at 631 percent, while the company filing cited in Yonhap's earnings reports showed 557.2 percent. At 9:15 a.m., Samsung Electronics advanced 4.5 percent, SK hynix rose 2.39 percent, SK Square surged 4.59 percent and Samsung Electro-Mechanics climbed 4.5 percent. A later Yonhap report said SK hynix shares were up more than 7 percent as of 10 a.m. after the earnings release before the market opened. The Korean won was trading at 1,327.1 won against the U.S. dollar at 9:15 a.m., down 0.1 won from the previous session's close. Investors remained cautious ahead of the Federal Reserve's rate decision early Thursday Korean time, looking for signals on the future path of U.S. interest rates.