South Korean chip giant SK Hynix is riding the AI boom, with profit more than doubling in the fourth quarter.
The chip maker, which supplies Nvidia, reported a 137% jump in operating profit to more than 19 trillion won ($13.5 billion) on Wednesday. That amount was 8.5% higher than forecast and helped its shares to rise by a further 9% in after-hours trade.
Huge demand for AI and AI chips has boosted prices for memory chips, causing Hynix shares to rise about 30% this year.
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The company makes high bandwidth memory (HBM) chips used in AI chipsets for designers such as Nvidia and reportedly has well over half of that market.
Sales of those chips doubled last year and Hynix is now focused on the next generation of HBMs.
There has also been a big jump in demand for DRAM and NAND chips used in personal computers, servers and mobile phones. But the company expects rising prices could cool growth in those sectors.
The big catalyst for SK Hynix and other chipmakers is the rush to build AI data centres.
The company also said it would cancel 12.2 trillion won worth of treasury shares (just over 2% of its total out outstanding shares), a move that lifts the value of its remaining shares.
Strategic investments in US
It also said it will invest $10 billion in a new US company, currently known simply as ‘AI Company’ to focus on strategic investments in American AI firms.
It plans to do this by restructuring Solidigm, a California-based subsidiary, which has been making solid-state drives since 2021, CNBC reported.
Hynix is building a $3.9 billion chip packaging fab and research facility in Indiana, which is due to begin operating in two years time, plus it has also committed close to $13 billion to build a packaging plant for advanced chips in South Korea.
Ties between Washington and Seoul have been a little strained recently, with US President Donald Trump warning that he would increase tariffs on Korean exports if its parliament does not approve the trade deal negotiated with President Lee Jay Myung soon.
That resulted in Lee’s chief policy official calling an emergency meeting in Seoul on Tuesday and the announcement of plans to visit the US soon to meet US trade chiefs at the White House.
The ruling Democratic Party also said it will move to pass a bill approving the deal next month (February).
- Jim Pollard
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