South Korea's SK hynix announced on Wednesday that its second-quarter net profit soared 1,242% year-on-year, propelled by the artificial intelligence industry's insatiable appetite for advanced memory chips. The Icheon-based company, a key supplier to US tech giant Nvidia, described the quarterly net profit of 93.9 trillion won (€56.9 billion) as "an all-time high quarterly performance."
Yet despite the record result, SK hynix shares closed 9.6% lower in Seoul after revenue and operating profit fell short of market expectations. The stock had already tumbled 14% the previous day, reflecting investor jitters over the sustainability of the AI boom and geopolitical tensions in the Middle East.
AI infrastructure investment under scrutiny
The global race to build data centres housing AI infrastructure has been a boon for SK hynix, but concerns about overvaluation and a potential market bubble persist. Park Joon-deok, marketing chief of the AI microchip division, addressed these worries on a call with investors and reporters: "We are aware of concerns that AI infrastructure investment might be slowing down." He cited jitters over firms renting data-centre capacity rather than building their own facilities, as well as the emergence of more efficient AI models that require lower memory workloads.
Park framed these developments not as a retreat but as a maturation: "We view these developments not as a scaling back of AI investment, but rather as a process of maximising the utilisation of the massive AI infrastructure built to date and accelerating its monetisation."
Operating profit between April and June jumped 557% from a year earlier to 60.5 trillion won (€36.6 billion). Revenue stood at 79.3 trillion won (€48 billion), with net profit boosted by a one-off gain from the sale of part of SK hynix's stake in Japanese flash-memory maker Kioxia, another beneficiary of the AI surge.
SK hynix said it plans to invest around 40 trillion won (€24.2 billion) this year, attributing growth to expanding investments in AI infrastructure as the technology evolves into more complex forms requiring greater high-bandwidth memory capacity. "With major tech companies increasing their AI infrastructure investments, additional supply requests continue to mount," the company stated. "As these investments are supported by revenue generated from AI services, the momentum in memory demand is expected to persist."
Strategic moves and market headwinds
Parent conglomerate SK Group announced on Saturday a new $500 billion (€438.6 billion) collaboration with Nvidia to invest in AI infrastructure. Earlier this month, SK hynix also raised $26.5 billion (€22.8 billion) through a US offering of American depositary receipts, one of the world's largest-ever equity offerings.
Despite these aggressive investments, shares in SK hynix and its larger South Korean rival Samsung Electronics had fallen sharply by 33% and 41% respectively over the month to Tuesday. KB Securities analyst Kim Dong-won attributed the earlier decline to concerns about the sustainability of the AI industry and conflict in the Middle East spooking investors. Nonetheless, Kim forecast that memory chip prices were likely to rise "at least 30% in the third quarter," with supply shortages likely to persist until 2028.
For European readers, the fortunes of SK hynix and its peers are closely watched, as the continent's own tech and automotive sectors rely heavily on semiconductor supply chains. The company's performance also echoes broader trends in AI investment that affect European firms like Mercedes-Benz, which recently lowered its sales forecast amid China's struggles, and AstraZeneca, which saw a modest profit rise on cancer drug sales. Meanwhile, the surge in China's CXMT IPO highlights the global race for AI chip dominance, a dynamic that European policymakers are monitoring closely as they seek to bolster the continent's semiconductor sovereignty.
