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The chip manufacturer SK Hynix overtook its larger competitor Samsung in quarterly profits for the primary time. Its lead in advanced memory chips has led to robust sales, that are expected to double this 12 months because the boom in artificial intelligence data centers continues.
SK Hynix's operating profit rose greater than 20-fold year-on-year to eight.1 trillion won ($5.6 billion) in the ultimate three months of 2024, surpassing Samsung's estimated operating profit of 6.5 trillion won, da Sales rose 75 percent to 19.8 trillion won.
SK Hynix predicted on Thursday that demand for its high-bandwidth memory (HBM) products will proceed to rise as a consequence of rising investment in AI servers and the growing importance of processing-intensive “inference,” where models generate predictions from data.
Generative AI leader OpenAI and Japan's SoftBank said Tuesday they are going to launch a large U.S. AI infrastructure project called Stargate, with plans to boost as much as $500 billion over 4 years Spending on Big Tech infrastructure projects is at its peak.
HBM chips accounted for 40 percent of SK Hynix's total dram chip sales within the fourth quarter. The principal supplier of such chips to Nvidia predicted that HBM sales would greater than double this 12 months. The company began shipping its most advanced 12-layer HBM3E chips within the fourth quarter and plans to ship next-generation 16-layer HBM4 chips within the second half of next 12 months.
“We expect continued growth in SK Hynix's earnings this 12 months as AI spending is prone to proceed increasing, which can boost HBM demand,” said Kwak Min-jung, an analyst at Hyundai Motor Securities.
The results were in keeping with analysts' expectations, but the corporate's shares fell 1.1 percent on Thursday as investors took profits after rising around 30 percent thus far this 12 months on renewed optimism about AI spending.
“The strong results show that HBM chips remain highly profitable as Samsung is just not yet supplying the chips to Nvidia,” said Albert Yong, managing partner of Seoul-based hedge fund Petra Capital Management.
Nvidia CEO Jensen Huang said this month that Samsung, which is fighting for Nvidia's business, needed to “develop a brand new design” to produce HBM chips to his company, but added that “they will do it and work in a short time.” . .
Shares of Samsung Electronics have gained just 0.5 percent thus far this 12 months as the corporate continues to face concerns about its technological edge.
“Huang's comments showed that Samsung still has a protracted option to go,” Yong said. “SK Hynix stays well ahead of Samsung within the HBM segment and it’ll take a protracted time for Samsung to catch up.”
Chey Tae-won, chairman of parent company SK Group, met Huang in Las Vegas this month to debate ways to expand their business relationships, telling reporters on the Consumer Electronics Show that the corporate is accelerating the pace of HBM development to maintain up with to maintain up with Nvidia's requirements.
The company plans to extend capital spending barely this 12 months, in comparison with about $15 billion last 12 months.
In a sluggish conventional storage market, SK Hynix expects sales of PCs and smartphones equipped with AI to extend and the market to choose up within the second half of the 12 months.
