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SK hynix believes that the market is starting to shift to a full recovery period.
SK hynix today announced its financial results for the first quarter of fiscal 2024 ended March 31, 2024. The company's consolidated revenue for the first quarter of fiscal 2024 was 12.4296 trillion won, operating profit was 2.886 trillion won, and net profit was 1.917 trillion won. Operating margin was 23% and net profit margin was 15% for the first quarter of fiscal 2024.
The company's first-quarter 2024 revenue hit a record high for the same period in history, and its operating profit was the second-highest since 2018, which was the best in the market, and the company sees it as moving out of a long downturn and beginning to move to a full recovery.
SK hynix said, "With the company's leadership in AI-oriented memory technologies such as HBM, the company increased sales of AI-oriented server products and continued to implement profit-oriented business activities, resulting in a 734% quarter-on-quarter increase in operating profit." The company also emphasized, "In the case of NAND flash memory, it is important for the company to successfully turn a profit with the increase in the proportion of sales of high-end eSSD products and the increase in the average selling price (ASP)." ”
Looking ahead, the semiconductor memory market will show a steady growth trend this year, as the demand for AI-oriented memory is growing, and the demand for general DRAM products will also recover from the second half of the year. The industry predicts that as high-end products such as HBM require greater capacity than conventional DRAM products, the supply of general-purpose DRAM products will decrease as the production of high-end products increases, and the inventory of suppliers and customers will be depleted.
In response to the growing demand for AI-oriented memory, SK hynix has decided to increase the supply of HBM3E products, which began production for the first time in the world in March this year, and expand its customer base. At the same time, the company will launch its fifth-generation 10nm (1b) 32Gb DDR5 DRAM products within this year to strengthen its market leadership in high-capacity DRAM products for servers.
With regard to NAND flash memory, SK hynix will promote product optimization in order to maintain the trend of improving performance. Focusing on the company's highly competitive high-performance 16-channel eSSD products and its subsidiary Solidigm's four-layer cell (QLC) high-capacity eSSD products, the company is focusing on increasing product sales. At the same time, the company will also respond to market demand with the launch of the fifth generation PCIe cSSD for AI PCs in due course and with the best product line.
NAND flash memory can be divided into single-level cells (SLC) that can store 1 bit of data per cell, multi-level cells (MLC) that can store 2-bit data, three-layer memory cells (TLC) that store 3-bit data, and quadruple level cells (QLC) that store 4-bit data. Compared to SLCs with the same number of cells, QLC can store up to 4 times as much data, making it easy to achieve high-capacity storage and cost-effective production.
In addition, SK hynix will invest in expanding production capacity in a timely manner. On the 24th of this month, the company announced that it has decided to designate its M15X plant in Cheongju, South Korea, as a DRAM production base and accelerate construction. In addition, we will smoothly promote mid- to long-term investment projects such as the Yongin Semiconductor Cluster and the Advanced Packaging Plant in Indiana, USA.
Accordingly, the scale of investment this year will be higher than the original plan at the beginning of the year. The company explained that the increase in investment was made in line with the growing trend of customer demand, and the supply of HBM and general DRAM will gradually increase according to market demand. In doing so, the Company expects to ensure greater investment efficiency and financial soundness while the global semiconductor memory market grows steadily.
Kim Woo-hyun, Vice President (CFO) of Finance at SK hynix, said, "With the company's leading edge in AI-friendly memory technologies such as HBM, the company's performance has begun to recover across the board. In the future, the company will continue to supply the highest performance products in a timely manner, and continue to maintain profit-oriented management and continuously improve the company's performance. ”
A day before SK hynix reported its earnings report, Texas Instruments announced its first-quarter financial results. According to the data, Texas Instruments' revenue in the first quarter was $3.66 billion, better than the market expectation of $3.61 billion; Net profit came in at $1.11 billion, also better than the consensus of $983 million. Texas Instruments also released an upbeat second-quarter earnings forecast, suggesting that the downward trend in demand for industrial and auto parts may be easing. The company expects second-quarter revenue to be in the range of $3.65 billion to $3.95 billion, compared to the consensus of $3.74 billion; Adjusted earnings per share are expected to be in the range of $1.05-$1.25 versus the consensus of $1.15.
As a leader in the HBM field, SK hynix became the second-highest market capitalization company in South Korea in December last year. Earlier this week, the company announced a plan to invest about $15 billion in South Korea to meet the rapidly growing demand for its HBM. The company expects the HBM market to grow at an annual rate of 60 percent.
SK hynix's rival Samsung Electronics released preliminary data earlier this month showing operating profit of about 6.6 trillion won ($4.9 billion), up 931.3% year-on-year, higher than analysts' expectations of 5.37 trillion won, ending a streak of quarterly declines that began in the third quarter of 2022.
In addition, Micron Technology's financial report released last month showed that the company expects revenue in the third quarter of fiscal 2024 to be between $6.4 billion and $6.8 billion, or a year-on-year increase of 70% to 81%, higher than the analysts' consensus estimate of $5.99 billion; Adjusted earnings per share are expected to be around $0.45, plus or minus $0.07, above analysts' consensus estimate of $0.24. Gross margin is expected to be in the range of 25% to 28%, higher than analysts' consensus estimate of 20.9%.
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