SK hynix's chip plant in Icheon, Gyeonggi Province / Courtesy of SK hynix Chip maker plans to focus more on high-priced products By Baek Byung-yeul SK hynix posted an operating loss of 1.79 trillion won ($1.31 billion) in the third quarter, but the memory chip maker was able to reduce its deficit by focusing on high-priced and high-performance AI memory chips such as high-bandwidth memory (HBM), according to the company, Thursday. In its third-quarter earnings announcement, the company said it generated 9.6 trillion won in sales, a 17.5 percent decrease year-on-year, but its DRAM memory chips returned to profit for the first time in two quarters. The company has been logging operating losses since the fourth quarter of 2022 due to a downturn in demand for memory chips. Its cumulative operating loss through this year reached 8.07 trillion won. Sales of its flagship products ― including HBM3, a memory chip for AI, and its high-capacity DDR5 DRAM and high-performance mobile DRAM ― improved in the third quarter from the previous quarter, SK hynix said. Currently, SK hynix is the exclusive supplier of HBM3 chips to U.S. graphic chip giant Nvidia. Operating profit SK hynix said the company’s performance is expected to be improved in the fourth quarter as the DRAM market continues to recover. “As market demand for high-performance memory products continues to grow, our performance has continued to improve from the low point of the previous quarter,” SK hynix said. “Also, DRAM memory chips, which went into deficit in the first quarter of this year, turned positive only in two quarters.” “We expect AI servers to grow at a compound annual growth rate of more than 40 percent over the next five years, while the HBM market is expected to grow at 60 percent to 80 percent over the next five years,” Park Myoung-soo, vice president and head of DRAM marketing at SK hynix, told investors during a conference call for the third-quarter earnings. “We expect HBM products to account for 10 percent of the total DRAM market next year.” The company is also increasing its investments in DDR5 DRAM memory chips, which have been showing signs of a supply shortage this quarter. "Based on the competitiveness of our DDR5 products, SK hynix has already created a crossover point in PCs and servers in the third quarter of this year,” Park added. Sharing its future strategy, SK hynix said it will focus more on high-priced products by shifting its manufacturing processes to 1b nanometer technology, the fifth generation of the 10-nanometer technology, and increasing investment in HBM. The company will also increase its capital expenditures next year, after they had been significantly reduced by about 50 percent year-on-year. “Next year's capital expenditures will be higher than this year's, but we will minimize the increase in consideration of investment efficiency and financial soundness,” Park said. SK hynix also emphasized that it is addressing uncertainties about sending its chip-making equipment to its China plants, which had been hit by the China-U.S. trade war. “Recently, we were notified of our Validated End User (VEU) status by the U.S. government, and we believe that we have substantially resolved the uncertainty regarding our operations in China, as we will be able to import without a separate export license,” said Kim Woo-hyun, chief financial officer at SK hynix.
