AI<\/a> spending by tech firms. <\/p>\n“There are concerns that tech firms will take a breather in infrastructure spending,” Lee Min-hee, an analyst \u200bat BNK Investment & Securities, said. <\/p>\n
Investor sentiment was further hurt by the company’s failure to provide detailed plans for sharing the benefits of the AI boom through higher shareholder returns, analysts said. <\/p>\n
While disappointing investors, the company said memory chip demand remained strong. <\/p>\n
“Major customers are still requesting more memory supply,” SK Hynix President Song Hyun-jong said on an earnings call, adding that it was seeking more long-term supply agreements to better manage chip price volatility. <\/p>\n
The move underscores how chipmakers are trying to convert today’s AI-driven boom into longer-term demand certainty amid concerns that spending on AI infrastructure could eventually cool. <\/p>\n
Long-term agreements include financial safeguards such \u200cas deposits to ensure contract implementation. The company has concluded talks \u2060on around 10 such deals and is continuing discussions with other major industry players, it said. <\/p>\n
The move comes as worries about the ability of “hyperscalers” like Microsoft, Alphabet, Amazon, Meta Platforms and Oracle to fund hundreds of billions of dollars of planned investment in AI infrastructure have driven down chip shares \u2060globally in recent weeks. <\/p>\n
AI DEMAND REMAINS ROBUST <\/p>\n
Despite those concerns, SK Hynix struck an optimistic note on AI memory demand, saying major technology companies continue to expand investments in AI infrastructure. <\/p>\n
“With major tech companies increasing their AI infrastructure investments, additional supply requests continue to mount,” the company said. “As these investments are supported by revenue generated from AI services, the momentum in memory demand is expected to persist.” <\/p>\n
While long-term deals improve visibility over \u200bfuture \u200bdemand, they may also temper near-term pricing gains, contributing to the earnings miss, analysts said. <\/p>\n
Story Continues <\/p>\n
SK Hynix also has higher \u200bexposure to high-bandwidth memory (HBM) chips, whose prices rose less than conventional memory, \u200cthey said. <\/p>\n
Bigger rival Samsung Electronics has estimated a 19-fold jump in second-quarter operating profit and is due to report its results on Thursday. <\/p>\n
“Samsung has greater pricing power and has raised prices more aggressively than SK Hynix,” said Lee Su-rim, an analyst at DS Investment & Securities. <\/p>\n
Reflecting its confidence in future demand, SK Hynix said it plans to raise capital spending this year to the high-40 trillion won range, up from 30.173 trillion won in 2025, to expand chip production capacity. <\/p>\n
The company downplayed concerns that its capacity expansion could lead to oversupply, saying it would adjust investments in line with market demand. <\/p>\n
Buoyed by its strong earnings, SK Hynix’s net cash reached 88 trillion won at the end of June. It aims to increase that to more than 100 trillion won to better \u200crespond to customer demand and stabilise business operations. <\/p>\n
With the company’s cash balance approaching its long-term target, investors are \u200bincreasingly focused on how that cash will be deployed, said Kim Sunwoo, a senior analyst at Meritz Securities. <\/p>\n
SK Hynix \u200bsaid it could not yet provide details on the timing, size or structure of its \u200bshareholder return policy, but planned to disclose the plan later this year. <\/p>\n
“SK needs to come up with a concrete shareholder return policy to turn around \u200cinvestor sentiment,” said Greg Roh, head of research at Hyundai Motor Securities. <\/p>\n
The \u200bcompany reported an operating profit of 60.5 trillion won ($41.62 \u200bbillion) for the April-June period, compared with 9.2 trillion won a year earlier and short of a 64 trillion won forecast by LSEG SmartEstimate, which is weighted toward analysts who are more consistently accurate. <\/p>\n
Quarterly revenue rose 257% to 79.3 trillion won. <\/p>\n
Net profit rose more than 13-fold to 93.9 trillion won, driven in part by 63.3 trillion won in \u200bgains related to investment assets, it said, without providing further details. <\/p>\n
Analysts estimated \u200cthat the company recognized cumulative investment gains following the completion last month of the sale of its stake in Japanese NAND flash memory maker Kioxia. <\/p>\n
SK Hynix invested \u200babout 4 trillion won in Kioxia in 2018 through a Bain Capital-led consortium of U.S., Japanese and South Korean investors, participating via two special purpose vehicles. <\/p>\n
($1 = 1,453.7200 \u200bwon) <\/p>\n
(Reporting by Heekyong Yang, Hyunjoo Jin and Joyce Lee; Editing by Jamie Freed and Sonali Paul) <\/p>\n","protected":false},"excerpt":{"rendered":"By Heekyong Yang and Hyunjoo Jin SEOUL, July 29 (Reuters) – South Korean chipmaker SK Hynix reported bumper…\n","protected":false},"author":2,"featured_media":790531,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45],"tags":[182,181,507,10260,74],"class_list":["post-790530","post","type-post","status-publish","format-standard","has-post-thumbnail","category-artificial-intelligence","tag-ai","tag-artificial-intelligence","tag-artificialintelligence","tag-sk-hynix","tag-technology"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/790530","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=790530"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/790530\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/790531"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=790530"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=790530"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=790530"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}