From Tom's Hardware: SK Hynix has this week reported a return to operating profitability in the fourth quarter of 2023. This marks a significant turnaround, with an operating profit of 346 billion won ($258.83 million). The fourth quarter improvement was attributed to a recovery in the DRAM chip market, driven by increased demand for expensive AI server (HBM3) and mobile applications (LPDDR5X).
"In DRAM, we responded swiftly to the surging demand from AI customers with premium products like high-density DDR5 and high performance HBM3, leveraging our technological competitiveness," said Kim Woo-Hyun, chief financial officer of SK Hynix, at the company's conference call with analysts and investors (via SeekingAlpha). "DDR5 sales increased by more than 4x and HBM3 sales increased more than 5x compared to the previous year. We solidified our position as a leading company in the HBM market, a core product of AI memory."
SK Hynix earned 11.31 trillion won ($8.459 billion) revenue in Q4 2023, a massive 47% year-over-year increase and a significant 25% quarter-over-quarter increase. The company's operating profit totaled 346 billion won ($258.83 million), which is a massive improvement compared to 1.912 trillion won ($1.43 billion) loss in the year-ago quarter. Still the company's net loss was 1.38 trillion won ($1.032 billion). While the results are as good as they were a couple of years back, they follow four consecutive quarters of massive losses.
There are several reasons why SK Hynix has managed to narrow its net loss and return to operating profitability. First up, the company increased shipments of expensive memory products — such as HBM3, HBM3E, LPDDR5X, LPDDR5T, and high-capacity DDR5 products — to makers of AI servers as well as smartphones. Sales of DDR5 increased by more than four times, and HBM3 by more than five times compared to the previous year, the company said. As a result, average selling prices (ASPs) of the company's DRAMs increased substantially, according to the memory maker.
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