SK hynix posts first 100 trillion won quarter on AI memory demand

Record revenue and an 80% operating margin

SK hynix said it recorded net profit of 39.7756 trillion won in the third quarter, with an operating margin of 80% and a net margin of 38%. Revenue rose 32% and operating profit 38% from the previous quarter, when the company reported revenue of 79.3187 trillion won and operating profit of 60.5426 trillion won.

Net income fell 58% from the second quarter, which the company's table lists at 93,922.6 billion won. Compared with the third quarter of 2025, revenue was up 328% and operating profit up 632%.

In DRAM, results were driven by a significant increase in sales of server DDR5, while HBM4 shipments began in earnest. In NAND, sales of 321-layer TLC eSSD expanded, and the company said high-value-added data center products continued to grow across the board.

The balance sheet also strengthened. Cash and cash equivalents reached 114.5 trillion won at the end of the quarter, up 26.5 trillion won, while borrowings fell by 2.8 trillion won to 15.8 trillion won. Net cash rose to 98.7 trillion won.

HBM4 to lead, supply shortage seen through 2030

SK hynix expects HBM4 to surpass HBM3E in both shipment volume and revenue in the fourth quarter and become a mainstream product. To support this, it will ramp up its M15X facility to maximum capacity by the end of the year. In NAND, it will raise the share of its 321-layer process to more than half of domestic production capacity in the fourth quarter.

For DRAM, the company plans to rapidly increase the portion of its 10nm-class 6th generation (1c) process and expand sales of DDR5 and LPDDR5 SOCAMM for AI servers.

On the market, SK hynix described a virtuous cycle in which AI-driven productivity gains and new revenue in areas such as software development, customer service and search lead to wider AI adoption and more infrastructure investment. It said AI spending is broadening beyond a small number of early investors to general enterprises and nation-level initiatives. The company argued that supply is not keeping pace with demand, citing the technical difficulty of leading-edge processes and long lead times for new facilities, and expects demand to exceed supply through 2030.

Long-term agreements and higher investment

SK hynix has signed long-term agreements (LTAs) with 14 major customers, including leading global cloud service providers. The volume secured so far corresponds to more than 50% of total production capacity for 2027 and 2028. The contracts typically run five years, and the company is discussing extensions with a number of customers.

According to the company, a mechanism that reflects market conditions within an agreed price range secures stable profitability while allowing flexible responses to market changes.

Investment is expected to increase significantly next year as Yongin Phase 1 enters full-scale operation and domestic and overseas infrastructure spending gains momentum. SK hynix said it will still adjust the scale and timing flexibly, weighing customer demand, product competitiveness, profitability and investment efficiency.

About 100 trillion won for shareholders

For fiscal year 2026, SK hynix plans shareholder returns of approximately 100 trillion won. This comprises cash dividends of 30 trillion won or more and share repurchases and cancellations of 60 trillion won or more, including the 40 trillion won announced in August. The company said this fulfills its commitment to return 50% or more of free cash flow. The 40 trillion won buyback was completed last week, and the shares will be cancelled shortly.

The board resolved a third-quarter cash dividend of 14 trillion won and a share repurchase of 20 trillion won. Of the repurchase, 10 trillion won will be cancelled in full, while the remaining approximately 10 trillion won will be used for employee compensation and is not counted in the shareholder return total.

The dividend is 20,000 won per share: a 10,000-won dividend reflecting improved earnings and a 10,000 won special dividend that shares gains from the Kioxia investment. The company said it will return most of those gains to shareholders this year.

What it means

The results show how strongly AI infrastructure demand is feeding into memory earnings. For customers, the LTAs covering over half of 2027 and 2028 capacity point to tight supply, and SK hynix expects that to last through 2030. For shareholders, the company has committed to regular buybacks and to special dividends when significant investment gains arise. The figures are preliminary, the company noted.