SK Hynix (SKHY.US) has a net profit of 28.6 billion in Q3 and mass production of HBM4. The shortage is expected to continue until 2030

According to Woofun AI, SK Hynix (SKHY.US) handed over an extremely strong financial report in the third quarter of 2026, with net profit of 39.78 trillion won (US$28.6 billion). This figure not only highlights its dominance in the AI storage field, but is also accompanied by management's long-term prediction of the industry's supply and demand pattern: the global shortage of memory chips is expected to continue until 2030.

Judging from the deep structure of financial performance, both revenue and operating profit reached record highs, revealing strong growth momentum in the main business. SK Hynix's revenue for the quarter reached 104.62 trillion won (about 75.3 billion US dollars), surging 327.9% year on year, up 32% month on month; operating profit also climbed to 83.33 trillion won (about 60 billion US dollars), up 632.1% year on year, up 38% month on month.

However, net profit did not continue the high of the previous quarter. Although net profit for the third quarter increased 216% year over year, it was far below market expectations of 59.66 trillion won; net profit for the second quarter was as high as 93.92 trillion won (about 67.6 billion US dollars), causing net profit for the third quarter to drop by about 58% month-on-month. This divergence was not due to the weakness of the main business, but was due to the fact that the second quarter included huge non-operating income from Kioxia (Kioxia) investment. In contrast, the continued high operating profit truly reflects the operational resilience of the memory chip business.

In terms of shareholder returns, SK Hynix has launched an unprecedented cashback program. The company announced that it will pay a cash dividend of 14 trillion won (approximately US$10.1 billion), with a dividend of 20,000 won per share in the third quarter, consisting of a regular dividend of 10,000 won and a special dividend of 10,000 won from Kioxia's investment income; the company will also repurchase an additional 20 trillion won of shares (approximately US$14.4 billion). On a full-year basis, total shareholder returns are expected to be approximately 100 trillion won (about 72 billion US dollars), including at least 30 trillion won in cash dividends (about 21.6 billion US dollars), and at least 60 trillion won in stock repurchases and cancellations for the whole year (about 43.2 billion US dollars).

This series of measures aims to implement its promise to return more than 50% of the cumulative free cash flow from 2025 to 2027. Of the 20 trillion won repurchases decided in the third quarter, about 10 trillion won was used for cancellation, and another 10 trillion won was used for employee compensation. The latter is not included in the total shareholder return.

Furthermore, on October 21, the company completed the 40 trillion won (US$28.8 billion) share repurchase plan previously announced in August about one month ahead of schedule. It has repurchased a total of 24.07 million shares, accounting for 3.3% of the issued shares, and plans to cancel all purchased shares.

According to data compiled by Woofun AI, SK Hynix's financial health has improved significantly, and profit margin indicators have increased across the board. The gross margin for the third quarter reached 86%, the operating margin was 80%, and the EBITDA margin was 84%, up 3, 4 and 3 percentage points, respectively, from the previous quarter. Diluted earnings per share were 54,454 won (about $39.2), down about 58% month-on-month, but still far higher than about 18,000 won (about $13) in the same period in 2025. Net profit margin recorded 38%. In terms of assets and liabilities, cash and cash equivalents increased to 114.5 trillion won (about 82.4 billion US dollars), loans fell to 15.8 trillion won, and net cash reached 98.7 trillion won (about 71 billion US dollars). Abundant liquidity provided solid support for subsequent expansion of production and R&D.

In terms of product drivers, mass production of HBM4 and the growth of DDR5 became the core engines. SK Hynix said that the DRAM business benefited from a significant increase in DDR5 server sales in the third quarter, and HBM4 also began mass shipments; on the NAND side, 321-layer TLC enterprise solid-state drive sales increased. The company has signed long-term supply agreements with 14 major customers (including the world's largest cloud service providers), covering more than half of production capacity from 2027 to 2028, and the agreement price is adjusted according to market changes. Looking ahead to the fourth quarter, HBM4's shipments and revenue are expected to surpass HBM3E and become a mainstream product.

At the same time, the company plans to increase the proportion of sixth-generation 10nm (1c) processes, expand sales of DDR5 and LPDDR5 SOCAMM for AI servers, and increase the share of 321-layer process products to more than half of Korea's domestic production capacity. In the medium to long term, high-bandwidth flash memory (HBF) and system optimization technology will further improve NAND's throughput capacity and economy in AI services.

In terms of capital expenditure strategies and capacity construction, SK Hynix adopted a relatively implicit disclosure method. The company anticipates a marked increase in domestic and overseas infrastructure investment in Korea as the first phase of the Yongin project enters full operation in 2027.

However, the company did not give a specific amount of capital expenditure for the next year, nor did it disclose the latest budgets and production schedules for Yongin Cluster, Cheongju P&T7, and the US Advanced Packaging Factory. The company emphasizes that in the future, it will flexibly adjust the investment scale and timing according to customer needs, product competitiveness, profit level and investment efficiency. Production capacity at the M15X plant will be maximized by the end of the year to increase HBM4 supply. This pace control reflects the company's balance between expansion and efficiency.

The competitive landscape, risks and challenges, and recent strategic adjustments make up the current complex context. As an important HBM supplier of Nvidia (NVDA.US) AI accelerators, SK Hynix faces fierce competition from Samsung Electronics and Micron (MU.US) in developing and expanding HBM products. Chinese storage vendors are also expanding their share of traditional DRAM and NAND markets, and their ability to mass-produce advanced products remains to be observed. Affected by uncertainty about the cloud giant's capital expenditure, the stock price of storage concept stocks experienced a sharp retreat in the past half month. Although SK Hynix's stock price rose more than 4% in early trading on October 28, market shocks had an impact on its capital layout. Last week, SK Hynix suspended the US subsidiary Solidigm's potential listing and IPO financing assessments. This strategic adjustment reflects the company's cautious attitude in the face of market fluctuations. The speed of mass production of HBM4 and the progress of customer certification in the next few quarters will directly determine whether SK Hynix can continue to expand its advantage in the high-end market, and changes in the supply and demand relationship will also be a key variable in testing its 2030 shortage forecast.