By Heekyong Yang, Hyunjoo Jin and Joyce Lee
SEOUL (Reuters) -South Korea's SK Hynix on Thursday posted a record quarterly profit as the Nvidia (NASDAQ:NVDA) supplier booked strong sales of its advanced chips, and said demand for high-bandwidth memory (HBM) chips would continue to outpace supply next year.
The company played down market concerns about an oversupply of the chips used in generative AI chipsets, saying production of higher-margin HBM chips was limited due to technological challenges, while demand was proving stronger than expected.
"We believe that it is premature to talk about demand slowdown for AI chips and HBM at this point," Kim Kyu Hyun, SK Hynix's head of DRAM marketing said on a conference call, citing ever-increasing requirements for computing power.
The world's second-biggest memory chipmaker reported a 7 trillion won ($5.07 billion) operating profit for the July-September quarter versus a 1.8 trillion won loss a year earlier.
That compared with a 6.8 trillion won average forecast by LSEG SmartEstimate, which is weighted toward analysts who are more consistently accurate.
"HBM sales showed excellent growth, up more than 70% from the previous quarter and more than 330% from the same period last year," SK Hynix said in a statement.
Revenue for the quarter rose 94% year-on-year to 17.6 trillion won.
"SK Hynix has reaffirmed its competitive edge in the HBM market with its market share and strong sales and expected sales of HBM next year. Its leading position as an HBM chip supplier is likely to continue next year," said Ko Yeongmin, an analyst at Daol Investment & Securities.
Shares of SK Hynix were trading up 1.4% against a 0.2% fall in the benchmark KOSPI as of 0150 GMT.
SK Hynix has outperformed rivals Samsung Electronics (KS:005930) and Micron Technology (NASDAQ:MU) in recent quarters, as it has benefited the most from AI-driven appetite for high-end memory chips following its early entry and large investments in HBM chip development.
Its shares have jumped 38.5% so far this year, while Samsung's stock has slumped 24.7%.
SK Hynix sees HBM sales making up 40% of its total DRAM revenue in the fourth quarter, up from 30% in the third quarter, and added it expects memory chip demand for AI servers to grow further next year as global tech companies continue developing generative AI.
Capital spending for this year is likely to be in the mid-to-high 10 trillion won range, with a slight increase expected in 2025, CFO Kim Woo Hyun said.
"Many companies are competing to research artificial intelligence," which will drive demand for servers to train the technology going forward, he told analysts on the earnings call.
Last month, SK Hynix, the main supplier of HBM chips to Nvidia, said it had started mass production of HBM3E 12-layer chips and plans to supply the latest products to unidentified customers by the end of this year.
Its bigger rival Samsung earlier this month warned its third-quarter profit would come in below market expectations and apologised for the disappointing performance, acknowledging its struggle to make headway in supplying high-end chips.
($1 = 1,379.9600 won)