- Anticipatory stockpiling of smartphone and PC chips in anticipation of potential US tariffs has further contributed to the company’s recent success
- Company anticipates continued strong demand from server chip spending by major technology firms seeking to exploit the early opportunities within the AI market.
SK Hynix, a prominent South Korean semiconductor manufacturer and a critical supplier of High-Bandwidth Memory (HBM) processors to Nvidia, has demonstrated remarkable resilience in the face of escalating geopolitical tensions and potential trade barriers.
The company’s recent financial performance, highlighted by a substantial increase in quarterly profit and a bullish outlook on future demand, underscores its strategic positioning within the rapidly expanding artificial intelligence (AI) market.
While navigating potential disruptions from US tariffs and export controls, SK Hynix appears poised to capitalise on the insatiable demand for its specialised memory solutions.
The surge in SK Hynix’s financial performance, with a 158 per cent jump in operating profit to 7.4 trillion won in the first quarter, is directly attributable to the explosive growth of the AI sector. This growth fuels the demand for HBM chips, essential components in AI-driven systems.
As a leading supplier to Nvidia, SK Hynix is uniquely positioned to benefit from this trend. Furthermore, anticipatory stockpiling of smartphone and PC chips in anticipation of potential US tariffs has further contributed to the company’s recent success.
However, this success unfolds against a backdrop of increasing geopolitical complexities. The US government’s investigation into semiconductor imports, citing national security concerns stemming from over-reliance on foreign production, casts a shadow over the industry.
Strategic supply chain
Similarly, tighter US export controls on chips destined for China, a measure already impacting Nvidia, pose a potential threat to SK Hynix. Despite these challenges, the company remains optimistic, stating that its HBM sales plans to key customers remain unchanged and aligned with pre-existing contracts.
This confidence stems from SK Hynix’s strategic supply chain and geographical diversification. While US customers account for a significant portion of its revenue, the company ships the majority of its products to non-US countries.
This mitigates the immediate impact of US tariffs, as its key clients, such as Apple and Nvidia, manufacture their products in China, India, Mexico, and Taiwan. Furthermore, the company anticipates continued strong demand from server chip spending by major technology firms seeking to exploit the early opportunities within the AI market.
Finally, SK Hynix anticipates continued market growth facilitated by factors such as the evolution of AI-enabled features in new smartphones, driving demand for high-performance mobile DRAM.
Moreover, the emergence of low-cost AI models developed by Chinese companies like DeepSeek is projected to lower entry barriers and intensify competition within the AI industry, ultimately boosting the need for high-density memory chips.