SK Hynix posted record Q2 profit with net income up 1,200%, driven by extreme HBM (high-bandwidth memory) demand from AI infrastructure buildout.

South Korea's SK hynix reported Wednesday that second-quarter net profit soared 1,242 percent year-on-year, driven by explosive demand from the artificial intelligence industry for its advanced memory chips. The quarterly net profit reached 94 trillion won ($64 billion), which the Icheon-headquartered firm described as "an all-time high quarterly performance."

The global expansion of data centres hosting AI infrastructure has dramatically boosted SK hynix's fortunes. Operating profit between April and June jumped 557 percent from the prior year to 60 trillion won, while revenue stood at 79 trillion won. The gap between operating and net profit was boosted by SK hynix's one-off sale of its 20 trillion won stake in flash memory maker Kioxia, another beneficiary of the AI boom.

The company attributed the growth to expanding investments in AI infrastructure as the technology evolves into more complex forms requiring greater high-bandwidth memory capacity. Park Joon-deok, marketing chief of the AI microchip division, acknowledged investor concerns during an earnings call: "We are aware of concerns that AI infrastructure investment might be slowing down." He pointed to hesitation among firms exploring data centre rental rather than construction, and the emergence of high-efficiency AI systems requiring lower memory workloads.

However, Park framed these developments positively: "We view these developments not as a scaling back of AI investment, but rather as a process of maximising the utilisation of the massive AI infrastructure built to date and accelerating its monetisation." The company stated: "With major tech companies increasing their AI infrastructure investments, additional supply requests continue to mount. As these investments are supported by revenue generated from AI services, the momentum in memory demand is expected to persist."

SK hynix intends to invest in the 40 trillion won range this year. Its parent firm, SK Group, announced plans Saturday for a $500 billion collaboration with Nvidia to invest in AI infrastructure. Earlier this month, SK hynix also raised $26.5 billion through an American Depositary Receipt listing in the US, one of the world's largest-ever equity offerings.

Despite these investments, shares of SK hynix have fallen 33 percent over the past month and tumbled 14 percent on Tuesday, the day before the earnings release. Larger South Korean rival Samsung Electronics saw shares fall 41 percent over the same period. KB Securities analyst Kim Dong-won attributed the decline to concerns about AI industry sustainability and Middle East conflict. Nonetheless, Kim forecast memory chip prices are likely to rise at least 30 percent in the third quarter, with supply shortages expected to persist through 2028. Samsung Electronics is scheduled to report its quarterly earnings Thursday, having forecast second-quarter operating profits to increase 1,800 percent from the prior year.