SK Hynix Shares Dip Despite Record Profit Amid Cautious Growth Plans

Seoul, South Korea - SK Hynix Inc. (000660.KS) reported a substantial 4.7% decline in its share price following the release of its quarterly financial results. Despite a record quarterly profit and plans to double HBM sales in 2023, investors were underwhelmed by the company's modest capital expenditure (capex) expansion.

Strong Financial Performance

SK Hynix recorded a remarkable surge in operating profit, jumping over 20-fold to 8.08 trillion won ($5.6 billion) during the December quarter. This impressive growth aligns with analysts' estimates and was driven by a 75% increase in revenue.

HBM Dominance and AI Demand

The South Korean chipmaker strengthened its position as the leading supplier of high-bandwidth memory (HBM) to Nvidia Corp. (NVDA), which is crucial for AI training. SK Hynix reported a significant increase in HBM sales and expects them to more than double this year.

Cautious Growth Outlook

Despite the strong financial performance, SK Hynix's share price dipped due to concerns over its modest capex plans. The company indicated a slight increase in capital spending for 2023, but investors remained cautious about the pace of expansion.

Stargate Project Boost

The recent announcement of the $100 billion Stargate venture, backed by SoftBank Group Corp., OpenAI, Oracle Corp., and MGX, provided a boost to AI-related companies, including SK Hynix. Analysts believe the company will benefit significantly from the increased data center spending.

Competition and Market Outlook

SK Hynix remains ahead of Samsung Electronics Co. (SSNLF) and Micron Technology Inc. (MU) in the design and supply of HBM. The company plans to launch advanced 16-layer HBM4 chips in the second half of 2024. Amid increasing demand for AI servers and inference applications, SK Hynix projects continued growth in HBM sales.

Key Takeaways

* SK Hynix reported a record quarterly profit, driven by strong HBM demand.
* Despite the positive results, the company's share price dipped due to concerns over its modest capex plans.
* SK Hynix is expected to benefit from the Stargate venture and growing demand for AI chips.
* The company faces competition from Samsung and Micron, but remains a leader in the HBM market.