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Today's Observation
SK Hynix has delivered its strongest quarterly financial results in company history. In the third quarter of FY2026, the company's revenue reached KRW 10.462 trillion, a 328% year-over-year increase and a 32% sequential increase, marking its first time surpassing KRW 10 trillion and exceeding the market expectation of approximately KRW 9.823 trillion. Operating profit reached KRW 8.333 trillion, up 632% year-over-year and 38% sequentially, also surpassing the market expectation of approximately KRW 7.696 trillion.
Operating profit margin further increased to nearly 80%, up by approximately 33 percentage points year-over-year. This means that for every 100 Korean won in revenue, SK Hynix generates nearly 80 won in operating profit. Such a high margin stems not only from high-value-added products like HBM but also reflects tight supply of AI server memory, traditional DRAM, and enterprise SSDs, which have simultaneously improved product pricing and sales mix.
The biggest product development this quarter is the full-scale ramp-up of HBM4. The company stated that HBM4 shipments have already substantially begun in the third quarter and are expected to surpass HBM3E in both shipment volume and revenue in the fourth quarter, officially becoming SK Hynix’s flagship HBM product.
This means SK Hynix's growth focus is shifting from HBM3E to the next-generation HBM4. Compared to traditional memory, HBM4 requires more advanced DRAM processes, stacking, packaging, and customer certification capabilities, offers higher product value, and benefits more directly from upgrades to next-generation AI accelerator platforms.
Growth is not only coming from HBM. Sales of server DDR5 have increased significantly, driving growth in the DRAM business; on the NAND side, shipments of 321-layer TLC enterprise SSDs have expanded, with high-capacity storage demand in data centers emerging as a new profit source. SK Hynix is transitioning from reliance on a single HBM product to balanced growth driven by HBM, server DRAM, and enterprise SSDs.
Data every minute
Revenue for Q3 FY2026 was KRW 10.462 trillion, representing a 328% year-over-year increase and a 32% quarter-over-quarter increase;
Market revenue is expected to be approximately 98.23 trillion KRW;
Operating profit of 8.333 trillion KRW, representing a 632% year-over-year increase and a 38% quarter-over-quarter increase;
Market expectations for operating profit are approximately 76.96 trillion Korean won;
Operating profit margin was approximately 80%, compared to 76% in the previous quarter and 47% in the same period last year;
Net profit of 3.978 trillion KRW, up 216% year-over-year but down 58% quarter-over-quarter;
HBM4 begins full-scale volume ramp-up in Q3;
The company expects HBM4 shipments and revenue in Q4 to exceed those of HBM3E;
SK Hynix has signed long-term supply agreements with 14 major customers;
Signed long-term agreements cover more than 50% of total capacity from 2027 to 2028;
Some long-term agreements typically last up to five years and feature pricing mechanisms linked to market prices within agreed-upon ranges;
The company expects the market structure of memory supply shortages to persist until 2030;
Cash and cash equivalents at the end of the quarter amounted to KRW 11.45 trillion, an increase of KRW 2.65 trillion sequentially;
Borrowing decreased to 1.58 trillion KRW, a reduction of 280 billion KRW环比;
Net cash increased to 98.7 trillion KRW;
Plan to implement approximately 100 trillion KRW in shareholder returns by 2026;
Of this, cash dividends amount to at least 30 trillion KRW, and share repurchases and cancellations amount to at least 60 trillion KRW;
The dividend per share for the third quarter is 20,000 KRW, including a special dividend of 10,000 KRW;
After the earnings report, SK Hynix's Korean stock price rose by approximately 2.4% in early trading.
MSX View
SK Hynsi's earnings report demonstrates that AI infrastructure investment has expanded beyond GPU demand to encompass the entire memory ecosystem. AI servers require more than just compute chips; model parameters, training data, and inference caches must constantly move between GPUs, HBM, server memory, and storage systems. As model sizes grow and inference requests increase, the system demands higher memory bandwidth, greater capacity, and faster data retrieval speeds.
HBM addresses high-speed data transmission near GPUs, while server DDR5 and SOCA MM handle larger-capacity system memory, and enterprise SSDs store models, training data, and inference results. SK hynix covers all three segments, enabling it to benefit not only from the increased value of HBM per GPU but also from the overall expansion of AI data centers.
This quarter, server DDR5 and enterprise SSDs grew in tandem, indicating that AI storage demand is beginning to extend beyond HBM. This is crucial, as relying solely on HBM could concentrate company revenue heavily on a few GPU customers and product cycles; the joint growth of server memory and enterprise SSDs can broaden the customer base and increase revenue opportunities per data center.
HBM4 is expected to surpass HBM3E in the fourth quarter, making it the most noteworthy forward-looking signal in this earnings report. Past competition in the memory industry primarily revolved around capacity, cost, and pricing, but HBM competition is now more dependent on product design, advanced processes, packaging capabilities, yield, and customer certification. Suppliers must co-develop with GPU vendors ahead of time and complete certification before accelerators enter mass production. This makes HBM more akin to customized semiconductors than traditional standardized memory products.
SK Hynix plans to ramp up M15X to maximum capacity by the end of the year, indicating that the company has entered the mass delivery phase for HBM4. As long as product yield and customer demand remain stable, HBM4 will continue to enhance its product mix and wafer-level value.
However, an 80% operating profit margin cannot be considered a long-term norm. This margin relies on three simultaneous conditions: rapidly growing demand for AI memory, tight supply of advanced production capacity, and continuously rising product prices. Once competitors increase HBM4 production capacity, traditional memory supply expands, or cloud providers slow their capital expenditures, prices and profit margins may decline.
SK Hynix is reducing this cyclical risk through long-term supply agreements. The company has signed long-term agreements with 14 major customers, covering more than 50% of its total capacity through 2027 and 2028, with pricing mechanisms linked to market rates within agreed terms. This model addresses two key issues simultaneously: customers secure guaranteed supply of HBM and server memory in advance, while SK Hynix can plan wafer, packaging, and equipment investments based on contracted demand, enhancing visibility into future revenues.
Another change is capital allocation. SK Hynix expects its investment scale to significantly increase by 2027, primarily directed toward M15X, Yongin Phase 1, and infrastructure in Korea and overseas. This high level of demand visibility justifies capacity expansion; however, large-scale capital expenditures will also increase depreciation and cash flow pressure. If market demand remains strong when the new capacity comes online, expansion will continue to drive revenue; if supply growth outpaces demand, price pressure may reemerge.
As of the end of the third quarter, the company had accumulated KRW 98.7 trillion in net cash, significantly improving its financial structure. This enables SK Hynix to simultaneously pursue advanced capacity investments and shareholder returns without fully relying on new debt to fund expansion. The company plans to deliver approximately KRW 100 trillion in shareholder returns in 2026, including cash dividends, share repurchases, and cancellations, and intends to return most of its investment gains from铠侠 through special dividends. This demonstrates SK Hynix’s transition from a cyclical company previously focused on repairing its balance sheet to a highly profitable business capable of both investing in capacity growth and returning cash to shareholders.
The decision to halt the Solidigm IPO is also related to this shift. The company originally intended to use external capital to support Solidigm’s expansion and reduce its own investment burden, but with increased cash reserves and changing capital market conditions, the necessity of an independent IPO has diminished. Retaining Solidigm also allows SK Hynix to fully capture the profits generated by growth in enterprise SSDs.
Therefore, the core of this earnings report is not just that revenue and profits have once again reached new highs, but that SK Hynix’s business model is evolving. HBM enhances product value and technological barriers, long-term agreements improve demand visibility, server DRAM and enterprise SSDs expand AI revenue streams, and strong cash flow supports continued investment and higher shareholder returns.
The next key metrics to watch are: whether HBM4 can surpass HBM3E as planned in the fourth quarter, the yield and profitability of M15X after capacity expansion, and whether the 2027 capital expenditure growth will continue to generate revenue and free cash flow at the same scale. SK Hynix has already proven itself to be a major beneficiary of the AI infrastructure cycle. The next phase will validate whether HBM’s technological advantages and long-term contracts can enable the company to maintain profitability and capital returns above those of traditional memory cycles while scaling up production.
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Risk disclaimer: Macroeconomic conditions and U.S. stock market volatility are significant; the content of this article is for academic and research observation purposes only by MaiTong Research Institute and does not constitute any investment advice.