SK Hynix Reveals Hike in Capex for 2024, Emphasizes AI Memory Leadership

SK Hynix, a major player in the semiconductor industry, has reported a notable operating profit of 346 billion won in the fourth quarter of 2023. This marks a significant turnaround for the company, breaking a streak of four consecutive quarters of losses, as the memory chip market showed signs of recovery.
SK Hynix chip investment in NANDSK Hynix posted revenues of 11.31 trillion won, operating profit of 346 billion won, with an operating profit margin of 3 percent, and a net loss of 1.38 trillion won, resulting in a net profit margin of negative 12 percent, for the three months ending December 31, 2023.

SK Hynix attributed the positive performance to improved conditions in the overall memory market during the last quarter of 2023. The demand for AI server and mobile applications witnessed an upswing, contributing to a rise in the average selling price (ASP). The company’s strategic focus on responding actively to customer demand and leveraging its market-leading technology in the DRAM space resulted in substantial growth in sales of its main products, DDR5 and HBM3.

For the entire year, SK Hynix reported a narrowed operating loss of 7.73 trillion won, with an operating profit margin at negative 24 percent, and a net loss of 9.14 trillion won, reflecting a net profit margin at negative 28 percent. The total revenues for the year amounted to 32.77 trillion won.

The company highlighted the impressive sales performance of DDR5 and HBM3, which increased by more than four and five times, respectively, compared to the previous year. In the NAND space, where recovery was relatively slow, SK Hynix prioritized streamlining investments and costs.
SK Hynix revenue growth in 2023SK Hynix has expanded sales of AI memory products significantly, leveraging technology / product competitiveness.

SK Hynix has continued its cost cutting efforts. For instance, the Capex of SK Hynix was down by more than 50 percent in 2023. SK Hynix has also minimized Opex. Consolidated Revenue decreased by KRW 11.9T and recorded operating loss due to severe memory price drop.

In DRAM business, SK Hynix has proactively responded to the surging AI demand, rapidly expanding sales of premium products i.e. DDR5 HDM & HBM3 Sales of DDR5 & HBM3 grew more than 4x and 5x, respectively.

In NAND business, SK Hynix has maintained conservative production stance and focused on investment / cost efficiency, under relatively challenging demand environment.

Looking ahead to 2024, SK Hynix outlined plans to continue focusing on high-performance DRAM products, such as HBM3E and HBM4, to meet the rising demand for AI memory. The company aims to strengthen its technological leadership by developing high-capacity server and mobile modules to address the growing need for AI servers and on-device AI adoption.

SK Hynix also intends to enhance profitability and stability in the NAND business by expanding sales of premium products like eSSD. For the coming year, the company’s strategic focus includes improving profitability and efficiency through the sale of value-added products while minimizing an increase in capital expenditure to ensure stable business operations.

SK Hynix said it will enhance capital expenditure (Capex) for the year 2024.

Kim Woohyun, Vice President and Chief Financial Officer (CFO) at SK Hynix, expressed satisfaction with the company’s remarkable turnaround, citing technological leadership in the AI memory space as a key driver of success.