SK hynix's headquarters in Icheon, Gyeonggi, on July 29, following the chipmaker's earnings disclosure for the second quarter of 2026.YONHAP
SK hynix logged a record-high operating profit of 60.54 trillion won ($41.64 billion) for the second quarter on the back of chip demand driven by the AI boom, but its market value evaporated by 849.56 trillion won in a month amid persisting doubts that bullish AI-related investment can generate returns.
Despite posting record-high profit figures, the results failed to satisfy the market's already lofty expectations for chip profitability. SK hynix shares fell 9.61 percent compared with the previous trading day, closing at 1.4 million won on Wednesday.
Profit jumped 577.3 percent from a year earlier, but still fell short of the 63.99 trillion won consensus from market tracker FnGuide.
Revenue for the April-to-June period rose 256.8 percent on year to 79.32 trillion won, also falling short of the analyst forecast of 83.94 trillion won, while net profit climbed 1,242.5 percent to 93.92 trillion won, exceeding the expected figure of 51.58 trillion won.
The bumper net profit figure was driven in large part by a one-time gain from the sale of SK hynix's stake in Japanese chipmaker Kioxia, while the lucrative results overall were attributed to sharp price increases for both dynamic random-access memory (DRAM) and NAND flash for the second consecutive quarter this year, as well as growing sales of high-value-added products, including high bandwidth memory (HBM), DRAM for AI servers and enterprise solid-state drives.
SK hynix said Wednesday it has secured long-term agreements (LTA) on chip supply with 10 customers so far. Market attention has focused on these LTAs, which may upend the memory industry's boom-and-bust cycle. The contracts have become more binding at three to five years, offering more stability than the previous de facto cap of one year. Deposits have also been added to secure purchase commitments.
However, the company did not provide specifics behind its LTA framework, saying it varies depending on each customer and product.
"We're focused on reducing uncertainty from short-term market fluctuations and securing mid- to long-term business stability for both customers and the company," SK hynix said during a conference call when asked to clarify the pricing structures of the LTAs.
The chipmaker also attempted to quell bearish investor sentiment over a potential pullback in AI investment, heightened by concerns of a cycle peak-out following the successful listing of Chinese chip manufacturer CXMT and the release of efficient, China-made AI models, dubbed the "Kimi Shock," that could reduce demand for high-performance chips.
"We view this trend not as a pullback in AI investment but as the process of raising the utilization of the large-scale AI infrastructure that has already been built out, and accelerating monetization," SK hynix said.
"We also don't believe the emergence of high-efficiency AI models will necessarily lead to lower infrastructure demand. As models and systems become more efficient, more users can access a wider range of services within the same infrastructure, which in turn broadens the accessibility and scope of AI services."
SK hynix also moved to dispel concerns over Chinese memory chipmakers closing the gap in the semiconductor market. On the question of Chinese firms' inroads into HBM and high-performance DRAM, the company said customers prefer suppliers that offer more stable supply and are free of quality issues.
The earnings figures also offered indicators that could help ease some of those concerns. SK hynix said average selling prices (ASP) for DRAM and NAND flash rose by 30 percent and the mid-50 percent range, respectively, compared with the previous quarter.
"We expect improved earnings in the second half to be further reinforced with higher DRAM shipment volumes and ASP gains from an improved product mix," the company said. "Bit growth in the second half is expected to exceed that of the first half, driven by expanded HBM4 volumes and increased shipments of 1c-nanometer-based conventional DRAM."
Attention has also focused on whether the company began supplying sixth-generation HBM4 to Big Tech clients including Nvidia. The company confirmed at the conference call that HBM4 shipments began sometime in the second quarter. Samsung Electronics has been supplying HBM4 since February.
"HBM4E samples were also supplied to major customers in the first half," SK hynix said.
Brokerages still forecast strong profitability for the company through 2027, but some have lowered target prices. Mirae Asset Securities, while maintaining its buy rating, cut its target price from 4.2 million won to 2.8 million won. BNK Investment & Securities also maintained its buy rating but lowered its target price from 1.85 million won to 1.48 million won.
"[Market] sentiment was further hit by concerns over China's production of homegrown lithography equipment," said Kim Young-gun, an analyst at Mirae Asset Securities. "But we believe this issue will have a limited impact on earnings through 2028."
Meanwhile, Lee Su-rim, an analyst at DS Investment & Securities, said SK hynix's profitability forecast has room for fresh record highs and that the chip industry remains strong.
"No signal of oversupply has been detected so far," Lee wrote. "Semiconductors remain at the center of the market rebound."
