SK Hynix: Provides Memory Chips That Train AI

SK Hynix commands more than 60% of the global high-bandwidth memory (HBM) market, the chips powering AI training clusters. It’s locked in multi-year supply deals with NVIDIA and other chipmakers, giving clear revenue visibility. HBM gross margins exceed 50%, roughly double those of conventional DRAM, underscoring the profitability of its AI exposure.

All HBM production slots are sold out through 2026, with customers already reserving 2027 capacity. NVIDIA now makes up 27% of revenue (vs 16% last year), showing strong ties with the world’s top AI chip designer. Pre-orders and advance commitments mean cash flow visibility is unusually strong for a memory producer.

Q3 2025 profit reached $8 billion, up 62% year-on-year, fuelled by AI infrastructure demand. Operating margins climbed to 47% from 42% earlier in 2025, as HBM pricing stays elevated. HBM now accounts for 45% of total DRAM sales, shifting SK Hynix’s mix toward structurally higher-margin products.

• Q4 Earnings January 2026: SK Hynix reports fourth-quarter results in late January 2026, with analysts expecting continued growth driven by AI chip demand. Investors will focus on customer order trends and whether the company can maintain its pricing premium as rivals expand production.

• New Memory Chip Launch Q1 2026: Shipments of next-generation HBM4 chips begin in late 2025, offering double the speed of current models at premium pricing. The chips will power NVIDIA’s upcoming AI systems and secure customer commitments extending into 2027, reinforcing revenue visibility.

• U.S. Factory Groundbreaking 2026: Construction of SK Hynix’s new U.S. facility begins in 2026, supported by government subsidies that lower capital costs. The site places production closer to major clients like Amazon and Microsoft, strengthening supply chain resilience and reducing exposure to trade tensions.

• Market Share Battle 2026–2027: Samsung and other competitors are investing aggressively to narrow SK Hynix’s lead, increasing pricing pressure and competition for key customers. The company’s ability to protect its 60% market share will depend on product speed, innovation, and exclusive partnerships with chip designers.

• Memory Technology Evolution 2027–2028: The memory industry is shifting to new standards, triggering fresh qualification cycles that could reset market leadership. SK Hynix is investing in next-generation designs to extend its edge through 2030, but any delay risks exposure to commoditised pricing.

• AI Deployment Beyond Data Centres 2027–2030: Artificial intelligence is expanding from data centres into devices such as smartphones and cars, potentially tripling overall memory demand. While this broadens SK Hynix’s addressable market, it brings lower prices and fragmented customers, requiring a balance between volume growth and margin stability.

Samsung is fast-tracking its own HBM qualification with NVIDIA and other major clients, aiming for volume production by late 2025. Micron’s early shipments of next-generation HBM to NVIDIA further intensify the competitive landscape.

HBM industry growth is slowing from 178% in 2024 to projected double-digit gains by 2026 as competitors expand manufacturing capacity. Analysts expect potential double-digit price declines once supply catches up with demand, threatening SK Hynix’s current 50%+ gross margins. Historically, memory pricing power tends to disappear within a few quarters once oversupply sets in.

NVIDIA accounts for 27% of SK Hynix’s revenue and holds leverage over product specifications, qualification timelines, and supplier allocation. As more suppliers enter the market, NVIDIA can push for lower prices and multi-source arrangements, reducing SK Hynix’s pricing power and exclusivity. The company’s profitability now depends heavily on maintaining its preferred-vendor status with a single customer facing rising competitive pressure.