South Korea’s chipmakers are raking it in. Can China close the gap?
South Korean memory chip giant SK Hynix kept almost 80 per cent of its total sales as operating profit last quarter, a margin almost unheard of in manufacturing, as the country’s chipmakers reap the rewards of the global artificial intelligence boom. Operating profit, defined as earnings from the company’s core business before interest and taxes, soared 632 per cent in the three months to…
South Korean memory chip giant SK Hynix reported record-breaking operating profits in the third quarter due to global AI boom. Operating profit skyrocketed 632% to 83.33 trillion won (US$62.76 billion) on revenues of 104.62 trillion won, marking its sixth consecutive record quarter. Analysts attributed this surge primarily to price increases rather than increased sales volume.
Samsung Electronics, SK Hynix's main domestic rival, also reported impressive figures with 195 trillion won in revenue and 107.4 trillion won in operating profit, a 55% margin. These companies supply over 60% of the world's dynamic random-access memory (DRAM) and high-bandwidth memory (HBM), which is crucial for AI systems. The South Korean companies have an edge over Chinese competitors due to decades of manufacturing experience, mature production processes, and advanced packaging facilities.
SK Hynix is extending long-term agreements with customers to secure predictable earnings and has announced a 60 trillion won shareholder-return plan. However, analysts question if such high profits and operating margins can be sustained over the long term, as prices may peak and margins could moderate in the coming quarters. The AI chip windfall could last another two to three years, driven by demand from Chinese companies and technological advancements in HBM.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
