(3rd LD) SK hynix logs record profit in Q3 on AI chip supercycle

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By Kim Han-joo

SEOUL, Oct. 28 (Yonhap) -- SK hynix Inc. said Wednesday its revenue and operating profit reached record highs in the third quarter, driven by robust demand for memory chips amid the artificial intelligence (AI) boom, while announcing a shareholder return program worth more than 100 trillion won (US$75.3 billion) for 2026.

Operating profit soared 557.2 percent from a year earlier to 83.33 trillion won in the July-September period, while revenue surged 327.9 percent on-year to 104.61 trillion won, according to the company's regulatory filing.

The global semiconductor vendor said it had posted record quarterly revenue and operating profit for six consecutive quarters since the second quarter of last year.

Net profit also hit a record 39.77 trillion won, up 215.7 percent from a year earlier.

"Amid market conditions in which prices of key products rose on growing demand for AI memory, the company once again achieved record quarterly revenue and operating profit, driven by its competitiveness in high-value-added products," SK hynix said.

"Building on these favorable conditions, we will accelerate efforts to expand production capacity and strengthen product competitiveness to sustain our current growth momentum," it added.

SK hynix has emerged as one of the biggest beneficiaries of the AI supercyle, supplying high-bandwidth memory (HBM) chips to Nvidia Corp. while capitalizing on soaring prices of conventional memory chips.

The company's operating profit margin also exceeded 80 percent in the third quarter, setting a new record and reflecting tight supply conditions.

"Virtually all of our DRAM and HBM production capacity for the next three years through 2029 has already been sold out," SK hynix said during a conference call.

The company said the outlook reflects a combination of volumes already secured under long-term agreements and demand currently under detailed discussion with customers.

"Structural imbalance between chip supply and demand is expected to persist for the time being," it added.

SK hynix said the memory supply shortage is expected to persist through 2030 amid expanding investment in AI infrastructure.

The company said its sixth-generation HBM4 chips will become its main product starting in the fourth quarter.

The latest results also came amid renewed concerns that semiconductor demand may have peaked, fueled by questions over the profitability of investments in AI.

SK hynix said it expects the momentum behind AI investment to continue as the financial burden of AI investments on major customers eases.

SK hynix also announced an additional plan to return 60 trillion won to shareholders, following the completion of a 40 trillion-won shareholder return program last week.

Of the more than 100 trillion won in planned shareholder returns for 2026, cash dividends will account for more than 30 trillion won, the company said.

The company said it would determine dividend payments based on operating performance, provide additional returns through special dividends when it realizes substantial investment gains and continue share buybacks every quarter.

SK hynix also plans to return most of its realized gains from its investment in Japan's Kioxia Corp. through a special dividend, with payments scheduled for the third quarter and the end of the fiscal year.

SK hynix is a major investor in Kioxia, a Japanese NAND flash memory manufacturer, through a Korean-U.S.-Japanese consortium led by Bain Capital.

The latest announcement follows the company's decision Friday to suspend plans to list its U.S. subsidiary, Solidigm, citing market conditions.

Reports have circulated that Solidigm was considering an initial public offering in the United States as early as next year, potentially valuing the subsidiary at up to $150 billion.

The decision came amid strong shareholder opposition and regulatory scrutiny over concerns that a separate listing could undermine the interests of minority shareholders.

SK hynix shares have faced sharp downward pressure, falling nearly 30 percent over the three months following the announcement of its second-quarter earnings.

On Wednesday, SK hynix shares were up more than 7 percent as of 10 a.m., after the company released its earnings results before the market opened.

khj@yna.co.kr
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