SK hynix breaks Q1 revenue records on back of AI boom
Memory biz ditches NAND production plans to make more crucial HBM tech
The global AI infrastructure buying frenzy is still in full swing – so much so that it has pushed the world's second largest memory maker, SK hynix, into its second highest operating profit ever and an all-time high for Q1 revenues.
"The memory market is entering into full recovery cycle with ongoing strength of AI demand," said the company on Thursday as it posted [PDF] a whopping 144 percent year-on-year change in revenue to 12.4 trillion won ($9 billion) for calendar Q1 of 2024.
Net profit came in at 1.9 trillion won ($1.4 billion) whereas a year ago SK hynix reported a 2.6 trillion won ($1.9 billion) net loss. Operating profit for Q1 2024 was 2.9 trillion won ($2.1 billion).
While recovery may come from the race to secure AI infrastructure, Sk hynix expects demand from "conventional DRAM" like smartphones, PCs and servers, to improve in the second half of 2024 and any related surplus of the products to dwindle.
SK hynix is the main supplier of high bandwidth memory (HBM) chips for Nvidia AI-training GPUs, and earier this week it outlined plans to increase supply volume of HBM3E.
HBM chips use a stacked design with layers of DRAM interconnected by through-silicon vias (TSVs), enabling higher memory density in a smaller space. The HBM market is expected to grow more than 60 percent annually, according to SK. However, it requires twice as large manufacturing capacity to secure the same production volume as general DRAM products.
"Industry experts believe that inventories both at suppliers and customers will decrease as an increase in production of premium products such as HBM requires higher production capacities than conventional DRAM, resulting in a relative reduction in conventional DRAM supply," detailed the memory maker.
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On Wednesday, a day before the earnings call, SK hynix said it had "decided that increasing DRAM capabilities with a focus on HBM is a precondition for future growth."
Hence, it revealed plans to invest over 20 trillion won ($14.5 billion) over the "long-term" to build a new memory chip manufacturing plant in North Chungcheong Province.
5.3 trillion won ($3.8 billion) is earmarked to construct the fab, and the rest to purchase machinery and equipment.
The M15X fab, which was originally slated to make NAND memory chips, will now mass produce DRAM instead. The fab, which is located directly next to M15, will begin production in November of 2025, assuming all goes to plan.
SK hynix M15 and M15X - click to enlarge
"Being located near the M15, which has been expanding TSV1 capabilities, the M15X is the best conditioned for optimization of HBM production," said SK hynix. M15 began producing HBM last year after being built in 2018.
SK Hynix's advanced packaging facility in Indiana will also produce HBM chips. The plant is scheduled to start production in 2028.
Of course, all of this ramping of production comes at a cost.
"Due to rising needs to meet the rapidly growing demand for HBM & new investment decision for M15X, the company's Capex this year is expected to be somewhat higher than initially planned," the company added. ®
Biting the hand that feeds IT
