SK hynix wobbles on market uncertainty, despite record 2024 earnings

Shares slide at 'most profitable' company in Korea as world worries over geopolitics

Market uncertainty and fears around trade protectionism are overshadowing SK hynix's latest earnings, with its shares sliding despite revenue doubling for the financial year just completed.

The Korean memory chipmaker said calendar 2024 reached record highs, up 102 percent year-on-year to ₩66.19 trillion (about $46 billion) in sales. It also recorded an operating profit of ₩23.4673 trillion (about $16 billion) compared to the loss reported in 2023.

Q4 revenues were up 75 percent to ₩19.767 trillion (nearly $14 billion) and operating profit jumped to ₩8.082 trillion ($5.6 billion).

These results have made SK hynix the most profitable company in Korea by quarterly operating profit, according to The Korea Times, passing its rival and the country's biggest biz Samsung Electronics.

All this is thanks to AI, or rather "prolonged strong demand" for AI memory, and in particular the company's High Bandwidth Memory (HBM) technology that is used in GPU accelerators such as those produced by Nvidia. Enterprise solid-state drives (eSSD) for datacenters also caused strong NAND flash demand.

SK hynix was first to mass production of 12-layer HBM3E products last year, getting in ahead its rival memory industry giants Samsung and Micron Technology, while Samsung also suffered problems with its HBM3E technology.

However, SK's shares dropped by as much as 4.7 percent after chief financial officer Kim Woo-hyun warned of weaker demand ahead for memory chips used in PCs and smartphones, rising competition from Chinese memory firms and growing market uncertainty.

"Uncertainties exist for the memory chip market this year as trade protectionism grows and geopolitical risks deepen, while PC and smartphone companies adjust inventories," Kim told analysts on its earnings call.

Among the factors causing uncertainty is the new US President, who has threatened to impose tariffs on imports, which is unsettling CIOs already struggling with budgets, especially as such tariffs might raise the cost of buying a laptop for Americans by 68 percent.

This comes on top of the ongoing tech cold war between the US and China, which saw Washington apply additional measures this month to attempt to control which countries can access advanced silicon produced by American companies, while Beijing responded with its own probe into whether US subsidies for chipmakers are harming China's own industry.

Despite this, SK hynix forecast that demand for HBM and high density server DRAM for high performance computing (HPC) will continue to increase as investment in AI servers continues to grow.

It plans to expand HBM3E supply and develop the successor HBM4 "In time to meet customers' needs."

However, the company told analysts its 2025 capital expenditure would rise only slightly from last year, according to Reuters, and this conservative capex plan fuelled market concerns about slowdown in demand. ®