On Thursday, SK Hynix announced record quarterly profits and revenue, reflecting strong demand in the market for $NVIDIA (NVDA.US)$ storage chips used in conjunction with processors for ai development.

As a supplier to Nvidia, the South Korean memory chip giant achieved an operating profit of 7.03 trillion Korean won ($5.1 billion) in the third quarter, compared to a loss of 1.8 trillion Korean won in the same period last year, exceeding analysts' expectations of 6.9 trillion Korean won. Revenue surged by 94% to 17.6 trillion Korean won, falling short of the market's expectation of 18.2 trillion Korean won.

SK Hynix's stock price has risen more than 35% since the beginning of the year, as the company has expanded its business in designing and supplying cutting-edge high-bandwidth memory (HBM) to power Nvidia's ai accelerators. $Samsung Electronics Co., Ltd. (SSNLF.US)$And$Micron Technology (MU.US)$Leading advantage. The company is expected to supply its 12-layer stacked HBM3E memory to Nvidia in the fourth quarter.

Additionally, the strong demand for enterprise solid-state drives (used in large-scale data centers) has also boosted SK Hynix's earnings.

SK Hynix stated: "Demand for artificial intelligence memory centered around data center customers remains strong. The company achieved its highest revenue since its inception by expanding sales of high-end products like HBM and eSSD."

"In particular, HBM sales showed outstanding growth, increasing by over 70% from the previous quarter and over 330% from the same period last year," the company added.

Bloomberg Intelligence analyst Masahiro Wakasugi said, 'SK hynix's operating margin in the third quarter improved compared to the second quarter, as the average selling price (ASP) of DRAM chips increased, while Micron's ASP rose by 15% in the previous quarter. SK hynix's dominant market share in HBM chips also helped achieve a stable operating margin, but demand for standard DRAM may be slowing down due to smart phones and PCs. The average selling price of NAND chips may rise slightly with Micron's increase.'

The broader memory chip market is recovering from the sluggish demand of smart phones and PCs. Prices of memory chips have rebounded after a long period of low prices.

SK hynix stated that this year's capital expenditure may exceed previous plans to keep up with the growth pace of ai hardware spending.

The company reportedly announced a series of investment plans this year, including investing $3.87 billion to establish an advanced packaging plant and artificial intelligence product research center in Indiana, USA.

In South Korea, SK hynix also spent $14.6 billion to build a new memory chip complex and continues other investments in South Korea, including the government-supported Pyeongtaek semiconductor cluster project.

Strong growth in HBM chip demand.

Against the backdrop of SK hynix's record performance, industry insiders seem to have undiminished optimistic expectations for the strong future demand for HBM.

At an event on Tuesday, SK Hynix CEO Kwak Noh-jung stated that the company plans to mass produce and supply its most advanced 12-layer HBM3E artificial intelligence chips to customers including Nvidia.

"Our plan to mass produce 12-layer HBM3E by the end of the year remains unchanged. Everything is going smoothly in terms of delivery and supply," he said.

At the time Kwak Noh-jung made the above remarks, a senior analyst at semiconductor research firm TrendForce projected that due to the surging demand from Nvidia and other artificial intelligence chip manufacturers, the HBM market will continue to grow strongly next year.

TrendForce's Senior Vice President of Research Operations Avril Wu stated that she expects the global HBM market to grow by 156% next year, increasing from this year's $18.2 billion to $46.7 billion. Additionally, she anticipates their share in the DRAM market to rise from 20% this year to 34% in 2025.

According to TrendForce, from the perspective of major providers of artificial intelligence solutions, there will be a significant transition to HBM3E from the HBM specification, with an expected increase in 12-layer stack products. The institution further added that this shift is expected to increase the HBM capacity per chip.

Wu mentioned that in the HBM product segment, the share of the fifth-generation HBM chip, HBM3E, is expected to increase from 46% this year to 85% in 2025, primarily driven by Nvidia's Blackwell GPU.

She stated that Nvidia will continue to dominate the artificial intelligence market next year, intensifying the competition among major storage chip manufacturers such as Samsung Electronics, SK Hynix, and Micron Technology.

Research analysts at TrendForce predict that samples of the sixth generation HBM4 will be released later next year, with companies like Nvidia expected to officially adopt it in 2026.

Samsung is facing difficulties.

In sharp contrast to SK Hynix, competitor Samsung earlier warned that its third-quarter profits would be below market expectations and apologized for the disappointing performance, admitting difficulties in high-end chip supply progress.

Currently, Samsung is reaching out to nvidia, $Alphabet-A (GOOGL.US)$Please use your Futubull account to access the feature.$Advanced Micro Devices (AMD.US)$And$Amazon (AMZN.US)$The company provides the fourth generation 8-layer HBM3 chip to customers like AWS, and provides HBM2E chips to Chinese companies.

Samsung is still striving to obtain Nvidia's approval for its HBM3E chips.

As Samsung faces fierce competition with rivals in the HBM field, the head of Samsung's Semiconductor Business, Vice Chairman Jun Young-hyun vowed to significantly reduce chip executive positions and restructure semiconductor-related businesses.

Samsung also established a dedicated HBM chip development team and partnered with$Taiwan Semiconductor (TSM.US)$Reached a cooperation agreement on HBM4 chips.

Editor/Rocky