SK hynix runs China plants despite U.S.-China tensions

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SK hynix runs China plants despite U.S.-China tensions

Published: 24 Jul. 2025, 16:43 Updated: 24 Jul. 2025, 19:21

LEE JAE-LIM
[email protected]

Audio report: written by reporters, read by AI

SK hynix headquarters in Icheon, Gyeonggi, on July 24. [YONHAP]

SK hynix said on Thursday that it will continue operating its China facilities to support growing demand for legacy DRAM amid geopolitical tensions, after posting record-high quarterly earnings fueled by global demand for high bandwidth memory (HBM).

The reaffirmation followed rising caution among domestic analysts that the utility of China-based plants may diminish due to the recent tightening of U.S. semiconductor export controls to China.

Operating profit for the April-June period soared 68.5 percent on year to 9.21 trillion won ($6.7 billion), exceeding a market forecast of 9.06 trillion won provided by financial data provider FnGuide. Quarterly revenue jumped 35.4 percent on year to 22.23 trillion won, also above analysts’ projections of 20.7 trillion won.

“We expect demand for legacy DRAM to remain steady for a considerable period,” SK hynix said during a Thursday earnings call, citing supply constraints driven by the industry’s shift toward HBM mass production and next-generation DDR5 and LPDDR5 products. “Therefore, to ensure a stable supply of general legacy products that require long-term customer support, we plan to actively utilize our China fab going forward.”

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SK hynix operates a DRAM fabrication plant in Wuxi, a packaging plant in Chongqing and a NAND flash facility in Dalian that it acquired from Intel.

The Korean chipmaker addressed concerns about the HBM market slowdown by citing AI growth as an effective buffer. On July 16, Goldman Sachs downgraded SK hynix from Buy to Neutral for the first time in three years, citing intensifying market competition resulting in price risks. SK hynix shares dropped 8.95 percent to close at 269,500 won the following day. After the earnings call, shares inched upward 0.19 percent on Thursday compared to the previous trading day.

“AI demand is expanding from training and inferencing, and inferencing has further been divided and advanced into areas like reasoning and agents, leading to a sharp increase in AI workloads and intensifying bandwidth bottlenecks,” the company said. “In this rapidly growing AI market, HBM is now positioned as a key product that quickly affects performance enhancement […] We believe there is no doubt about the growth potential of HBM demand.”

In response, the company plans to allocate additional investment to HBM-related equipment than originally planned for this year, although it did not cite the numbers. The scale of investment will be finalized after discussions with key customers are finalized.

The company is currently juggling the construction of three plants worldwide: the M15X fab in Cheongju, North Chungcheong; the Yongin semiconductor complex in Gyeonggi and an advanced packaging facility in Indiana.

The M15X fab is scheduled to open in the fourth quarter of this year and will be used for production of DRAM, including next-generation HBM, starting next year. The Phase 1 fab of the Yongin cluster is slated for completion in the second quarter of 2027. As for the Indiana advanced packaging facility, the conference call did not directly mention when mass production would begin, but prior corporate statements indicate the second half of 2028.

The company also looks to “capitalize opportunity” in regards to recently eased export controls for Nvidia’s H20 chips to China. Nvidia CEO Jensen Huang confirmed that lower-performance AI chips will swiftly resume shipments to China soon after a three-month ban, fueling hopes for Nvidia’s Korean suppliers such as SK hynix and Samsung.

“We were a primary HBM supplier for this product prior to the export controls, and we believe that if customer demand and our internal supply conditions are aligned, we are well positioned to respond swiftly.”

BY LEE JAE-LIM [[email protected]]