SK Hynix Inc. unveiled plans to return about $45 billion more to shareholders after profit surged a stronger-than-expected seven-fold, reflecting the resilience of an AI infrastructure rollout that's propelling chip demand.
The world's second-biggest memory chipmaker reaffirmed it expects shortages of the components crucial to Nvidia Corp. accelerators to persist through at least 2030. Executives said they will invest heavily in expanding capacity, after selling out of conventional and high-bandwidth AI memory till 2029. That's after SK Hynix reported a September-quarter operating profit of 83.3 trillion won ($62.5 billion), beating projections by more than 7%.
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SK Hynix's confidence in the industry's outlook helped ignite a broader regional stock rally that propelled heavyweights from bigger rival Samsung Electronics Co. to Japan's Kioxia Holdings Corp. and even China's Semiconductor Manufacturing International Corp. The multi-year order book reassured investors about the data center buildout, while suggesting memory prices haven't yet peaked.
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"Investors have been questioning both the durability of AI demand and how much of the earnings windfall would ultimately reach shareholders," said Jung In Yun, chief executive officer at Fibonacci Asset Management Global. "Today's announcement helps address both concerns."
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SK Hynix's shares rose more than 10% in Seoul, while Samsung gained more than 9%. The results bolstered hopes for sustained profits from a surge in demand for memory from AI developers building data centers. That's come under increasing scrutiny in recent weeks because of challenges in financing and setting up ambitious infrastructure projects.
On Wednesday, SK Hynix laid out plans to return 60 trillion won to shareholders in the remainder of the fiscal year through buybacks and dividends, on top of a previously announced 40 trillion won. Much of that stems from gains it locked in after a sale of stock in Kioxia earlier this year.
SK Hynix and Samsung are among the biggest beneficiaries of the AI frenzy, supplying high-bandwidth memory to the likes of Nvidia while capitalizing on soaring prices of conventional memory chips. Its operating margins remain historically elevated, reflecting a persistent supply crunch.
Memory now constitutes roughly a third of all expenses related to AI data centers, according to research by Macquarie, and SK Hynix plays a key role in that business because of its ties with Nvidia. That share of overall computing-hardware spending is expected to rise in coming years as HBM prices are set to more than double in 2027, Macquarie said.
SK Hynix has prioritized long-term contracts with customers including Nvidia. Like Samsung and Micron Technology Inc., it's shifted production in recent years toward HBM, tightening supply of conventional memory.
SK Hynix's additional shareholder payouts could provide another catalyst for the stock after the chipmaker abandoned a potential $10 billion US listing of its Solidigm unit, responding to shareholder opposition and regulatory scrutiny.
Solidigm is now in talks with the US Commerce Department to invest $45 billion in a new chip plant on American soil, Bloomberg News reported. A major producer of flash memory chips, it was the latest marquee name to shelve an initial public offering - joining data-center operators Firmus Grid Ltd. and AirTrunk as mounting AI-bubble concerns rattle global markets.
For now, SK Hynix's outperformance is brightening sentiment a day before Samsung is slated to report its own quarterly earnings.
SK Hynix "ticked all the check boxes with a significant operating profit beat, substantial shareholder return, and confident outlook on capex and shortages," said Vey-Sern Ling, managing director at Union Bancaire Privee.
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"The fundamental demand outlook is clear and strong, and the company is investing to grow, and returning cash to shareholders."
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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