SK hynix returns to profit on robust demand for AI chips in Q1

Seoul, April 25 (IANS) SK hynix said on Thursday it swung to a profit in the first quarter of this year on the back of rising global demand for premium memory chip products used for artificial intelligence (AI) computing.

The world's second-largest memory chipmaker posted an operating profit of 2.88 trillion won ($2.09 billion) for the January-March period, compared with a loss of 3.4 trillion won a year ago, the company said in a regulatory filing.

It is the second-highest quarterly operating profit, following the records of the first quarter of 2018.

Its net profit came to 1.91 trillion won, turning from a loss of 2.58 trillion won a year earlier.

Sales shot up 144.3 per cent to 12.42 trillion won, marking a record high for a first quarter.

The earnings beat market expectations. The average estimate of net profit by analysts stood at 1.53 trillion won, according to a survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.

SK hynix attributed the larger-than-expected first-quarter performance to robust sales of its premium products for artificial intelligence, including high bandwidth memory (HBM) chips and a rebound in demand for NAND flash memory chips.

"An increase in the sales of AI server products backed by its leadership in AI memory technology, including HBM, and continued efforts to prioritize profitability led to a 734 percent on-quarter jump in the operating profit," the company said in a statement.

SK hynix expects the memory chip market will experience steady growth in the coming months as demand for AI memory continues to rise and the market for the conventional DRAM starts to recover from the second half.

Moreover, inventories both at suppliers and customers are forecast to decrease thanks to rising production of premium products such as HBM and relatively decreasing supply of conventional DRAMs.

SK hynix said it will increase supply volume of HBM3E products, the up-to-date HBM that was mass produced in March for the first time in the industry, and expand its customer base.

It also plans to introduce 32 gigabits DDR5 products based on the 1bnm process, the fifth generation of the 10nm technology, within this year to strengthen its leadership in the high-capacity server DRAM market.