SK hynix posts record quarterly profit on AI infrastructure boom
SK hynix reported net profit of 40.3 trillion won ($27.2 billion) in the first quarter, nearly quadrupling from the same period last year and beating analyst expectations by 37 percent. The South Korean chipmaker attributed the surge to sustained demand for memory chips powering artificial intelligence systems.
Revenue exceeded 50 trillion won for the first time in a single quarter. Operating profit nearly doubled from the previous three months, despite the first quarter typically being a seasonal slowdown for the industry.
What's driving the demand
Governments and major technology companies are investing heavily in AI infrastructure, creating sustained demand for the hardware that powers generative AI tools. SK hynix said demand for high-bandwidth memory (HBM) chips used in AI servers has particularly surged.
The company noted that as AI evolves from large model training to real-time inference across multiple services, the foundation for memory demand continues to expand. Conventional memory chip prices and shipments have also climbed alongside HBM demand.
SK hynix shares have risen approximately 600 percent over the past year. The stock gained around one percent in morning trading as Seoul's benchmark Kospi index opened at a record high.
Supply agreements extend longer
Major technology customers are signing long-term supply contracts with memory chip suppliers for three years or more, with some seeking options to extend beyond the initial term. This signals confidence in sustained demand and an emphasis on supply stability from buyers.
Analysts expect earnings momentum to remain strong for SK hynix throughout 2026. A Shinhan Securities report from early April predicted excess demand for standard DRAM and NAND memory chips would persist through year-end, allowing suppliers to maintain pricing power.
Capacity and production shifts
As chipmakers prioritize the lucrative AI sector, they are producing fewer standard chips used in consumer electronics like phones and laptops. This supply constraint is pushing up device prices for everyday consumers.
SK hynix plans to increase chipmaking capacity and will spend 19 trillion won to build a new factory in Cheongju, South Korea. The company said it will continue rolling out new products across both DRAM and NAND flash memory to address diversifying demand.
The head of DRAM marketing warned that suppliers are struggling to meet current demand and that rising memory prices would likely persist longer than in previous cycles.
Middle East concerns contained
SK hynix said the Iran war would have only a "very limited" impact on its supplies of raw materials. The company has completed supplier diversification for Middle Eastern fuel imports, on which it previously relied heavily.
Long-term contracts for oil and gas mean war-induced price fluctuations are not significant, according to the company's chief financial officer Kim Woo-hyun.
Broader economic impact
Soaring semiconductor demand has driven stronger-than-expected growth in South Korea. The country posted its fastest quarterly economic expansion in more than five years, with the semiconductor sector as a key contributor.
SK hynix and Samsung Electronics are both supplying HBM chips to Nvidia for its forthcoming AI platform, expected to further boost the technology's capabilities.
While investors periodically express concern about how long the AI boom will last, analysts do not expect a near-term reversal. The shift toward longer supply contracts and continued infrastructure investment suggests the demand cycle has structural foundations beyond near-term hype.
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