SK Hynix Reports Strong Q2 Earnings Amid AI Memory Demand Surge

SK Hynix announced a significant rebound in its operating profit for the June quarter, reaching its highest level since 2018. The South Korean semiconductor giant reported a profit turnaround from a loss of 2.88 trillion won in the same period last year, attributing this success to a 32% increase in revenue compared to the previous quarter. This growth is largely driven by rising prices of memory products, particularly high-bandwidth memory (HBM) used in artificial intelligence applications. The company highlighted that the demand for AI memory, especially from major clients like Nvidia, has been a key factor in its financial recovery. In an earnings call, SK Hynix projected that strong demand from AI servers would continue into the second half of the year, alongside a gradual recovery in traditional markets with the introduction of AI-enabled PCs and mobile devices. To meet the surging demand for AI processors, SK Hynix is expanding its HBM production capacity. However, the company noted that HBM requires more wafer capacity than standard dynamic random access memory (DRAM), which is currently facing supply constraints. Analysts, including SK Kim from Daiwa Capital Markets, predict that tight supply conditions for HBM and memory products will persist until 2025 due to production bottlenecks. The ongoing AI boom, driven by advancements in large language models like ChatGPT, is expected to keep the supply of high-end memory chips constrained throughout the year, posing challenges for manufacturers in the semiconductor industry.