SK Hynix Inc. reported a six-fold surge in quarterly profit, but its shares tumbled after the financial results fell short of analysts’ supercharged expectations for an artificial intelligence leader. SK Hynix shares slumped over 15% on Thursday, following a 13% drop on Wednesday.
Record Financials and Analyst Misses
For the second quarter ended June, the South Korean chipmaker posted revenue of 79.32 trillion won ($54.55 billion) and operating profit of 60.54 trillion won. While revenue jumped 257% year-on-year and operating profit soared nearly 557%, both figures missed LSEG SmartEstimates of 84 trillion won in revenue and 64 trillion won in operating profit. For the first time in company history, cumulative revenue for the first half of the year exceeded 100 trillion won.
SK Hynix reported an operating profit margin of 76.3% for the second quarter, while Bloomberg noted margins of more than 80% for the June quarter. Josh Gilbert, lead analyst for APAC at eToro, noted that a gross margin of 83% indicates pricing power is alive and well in a market where customers fight over supply.
AI Demand and Supply Chain Dynamics
The weaker-than-expected earnings and shipment delays for some advanced products limited price gains for mainstay dynamic random access memory (DRAM) chips, heightening market concerns about slower AI spending by big tech firms. Lee Min-hee, an analyst at BNK Investment & Securities, stated, There are concerns that tech firms will take a breather in infrastructure spending
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Despite market selloffs and broader anxieties regarding hyperscalers such as Microsoft, Alphabet, Amazon, Meta Platforms, and Oracle funding hundreds of billions in planned AI infrastructure, SK Hynix emphasized that demand remains robust. Major customers are still requesting more memory. High-performance products for AI servers led price increases that set a fresh record, driven by ongoing revenue from AI services.
To cushion itself against volatile demand cycles, SK Hynix has concluded talks on about 10 long-term supply deals. However, analysts noted that these long-term agreements could limit the upside in memory prices and that the company’s failure to provide detailed plans for higher shareholder returns hurt investor sentiment.
Capital Expenditure and Production Plans
Reflecting confidence in future demand, SK Hynix earmarked at least $31 billion in capital spending this year, with expectations to raise capital investments around 50% to the high-40 trillion won range. This compares to 30.2 trillion won in 2025.
The company downplayed concerns that its capacity expansion would lead to oversupply, stating that investments will be adjusted in line with market demand. SK Hynix plans to maximize production by utilizing existing manufacturing hubs in Icheon and Yongin, while boosting NAND production and advanced packaging in Cheongju.
Regarding advanced components, SK Hynix began mass shipments of HBM4 in the second quarter and completed sample shipments of HBM4E during the first half. In NAND, the company is accelerating its transition to advanced process nodes, with 321-layer products already capturing the largest share of total production and targeted to reach about 50% of domestic production capacity by the end of the year.