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Chipmaker SK Hynix’s quarterly operating profit has more than doubled on strong sales of advanced memory chips used in artificial intelligence products, amid stockpiling ahead of looming US tariffs. Analysts said SK Hynix toppled arch-rival Samsung Electronics as the world’s biggest dynamic random-access memory (Dram) chipmaker for the first time during the first quarter. Operating profit rose 158 per cent to Won7.44tn ($5.2bn) in the first three months of this year, much higher than the Won6.6tn forecast by analysts polled by Bloomberg. Sales increased 42 per cent year on year to Won17.6tn. The strong earnings were driven by robust sales of high bandwidth memory (HBM) chips used in AI hardware. But the chipmaker warned of possible demand volatility in the second half due to macroeconomic uncertainties while stressing that HBM demand will be less affected by potential US tariffs on semiconductors.
“Demand uncertainty will increase because of tariff policy changes and other restrictions, but this is expediting demand for IT consumer goods as some consumers rush to buy products before prices rise,” Kyu Hyun Kim, head of Dram marketing, told analysts on Thursday. SK Hynix, a main HBM supplier to Nvidia, captured 36 per cent of the Dram market in the January-March period, followed by Samsung at 34 per cent, according to Counterpoint Research. Dram is the most widely used memory chip in PCs and servers to help process data. HBMs are made by stacking Dram chips.
“The changed dynamics will probably continue for the time being as Samsung finds it difficult to catch up with SK Hynix in HBM,” said Daniel Kim, an analyst at Macquarie. “AI and HBM are fast-changing markets. It is not easy for Samsung to catch up as a latecomer.” SK Hynix widened its lead in HBM, with a 70 per cent market share in the first quarter, Counterpoint Research said. Its HBM market share will remain above 50 per cent this year, with Samsung’s share falling to below 30 per cent and US rival Micron Technology’s share rising to almost 20 per cent, according to market researcher TrendForce. The company expects Big Tech to maintain its spending on server chips to compete in AI, while new AI features in smartphones will fuel replacement demand, increasing sales of high-performance mobile Dram chips. SK Hynix still expects HBM demand to double this year.
Its shares fell 0.8 per cent on Thursday morning as short selling of its stock surged to a record high of Won1.5tn so far this month, according to Bloomberg data, with the industry facing increasing uncertainties from looming US tariffs and Washington’s tougher export controls on China, as well as growing global recession fears. Foreign investors sold a net Won2.8tn of the company’s shares this month, after the stock price more than doubled over the past two years, driven by the AI boom. The shares have fallen about a fifth from a January high.
“Earnings season won’t matter with larger forces at work,” Morgan Stanley analysts said in a research note. “The real tariff impact on memory resembles an iceberg, with more danger unseen below the surface and still approaching.” President Donald Trump has said tariffs on chip imports would begin “very soon”. The US has also imposed special licensing requirements on Nvidia selling its H20 chips to Chinese customers, with the US chipmaker recording a $5.5bn earnings hit this month as a result.
“This can affect Hynix’s earnings, but the impact will probably be limited, given the supply shortage of high-end HBM chips,” said Macquarie’s Kim. “Positive momentum is expected for the company this year and next unless the global economy slips into recession.”
