SK Hynix, the world’s second largest memory chip manufacturer, said that the craze of artificial intelligence will drive chip profit growth, and the company’s losses in the third quarter narrowed significantly from the previous quarter.
The company said that strong demand for advanced chips used in artificial intelligence has cushioned the impact of continued sluggish demand for common chips used in devices such as smartphones and computers.
SK Hynix said its business of selling DRAM chips used in technology equipment returned to profitability in the third quarter, after losing money in the first two quarters of this year.
“The DRAM business… is expected to continue to improve as generative artificial intelligence booms. The still loss-making NAND flash business is also showing signs of improvement,” the chipmaker said in a statement.
SK Hynix said its operating loss in the third quarter was 1.8 trillion won, compared with a profit of 1.7 trillion won in the same period last year.
This was its fourth consecutive quarterly loss, but an improvement from losses of 3.4 trillion won in the first quarter of this year and 2.9 trillion won in the second quarter.
SK Hynix’s third-quarter operating income fell 18% year-on-year to 9.1 trillion won.
The memory chip industry has been experiencing its weakest decline in decades since last year. Analysts said SK Hynix’s business of selling NAND flash memory chips used for data storage could lose about 2 trillion won in the third quarter as demand dries up.
However, demand for SK Hynix’s advanced DRAM chips, such as high-bandwidth memory (HBM) chips for generative artificial intelligence in the fast-growing field, is solid. SK Hynix is ahead of rivals in developing the HBM3 chip and landing AI chip leader Nvidia as a customer.
SK Hynix said the effects of production cuts by memory chip manufacturers are starting to show, with customers starting to place new orders and chip prices starting to stabilize.
Some analysts expect SK Hynix to turn profitable in the current quarter as makers of equipment such as smartphones and PCs grapple with weak consumer demand and gradually reduce their chip inventories to levels low enough to resume purchases .
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