SK Hynix Tops ₩100 Trillion as Memory Shifts From Cycle to Contract

An 80% operating margin, the HBM4 ramp and long-term supply deals lifted SK hynix to record results, and a ₩100 trillion return plan revived a stock that had halved since June.

Key Takeaways

• Third-quarter revenue rose 328% to ₩104.6 trillion and operating profit 632% to ₩83.3 trillion. Both beat the LSEG SmartEstimates of ₩98.3 trillion and ₩76.7 trillion by a wide margin.
• Net profit fell 58% from the prior quarter to ₩39.8 trillion on investment valuation and currency losses. Net cash climbed to ₩98.7 trillion, which is paying for the largest shareholder return in the company’s history.
• Long-term agreements with 14 customers cover more than half of 2027 and 2028 capacity. The shares rose more than 8%, and the KOSPI briefly got back above 6,000 as investors started to believe the earnings could last.

A Threshold Crossed

On Wednesday, SK hynix reported third-quarter revenue of ₩104.6 trillion, about $79 billion. It is the first quarter in the company’s history above ₩100 trillion. Operating profit reached ₩83.3 trillion, up 632% from a year earlier and 38% from the second quarter. Revenue grew 328% and 32% over the same periods. The operating margin settled at 80%. Twelve months ago it was 47%, and that quarter was itself celebrated as the first in which SK hynix earned more than ₩10 trillion in operating profit.

Expectations were high, and the company beat them easily. LSEG SmartEstimates had pointed to revenue of ₩98.3 trillion and operating profit of ₩76.7 trillion. SK hynix has now posted record operating profit for six quarters in a row, and its operating profit for the first nine months of the year comes to ₩181.5 trillion. Among the world’s largest technology companies, only Samsung Electronics and Nvidia earned more operating profit in the quarter, and only Micron reported a wider margin. Investors long treated SK hynix as a commodity supplier at the mercy of the memory cycle. For now, it earns like a toll collector on artificial intelligence.

Price, Mix and the HBM4 Handoff

Higher prices explain most of the quarter. Management told analysts that average DRAM prices rose by a high-20s percentage from the second quarter and NAND prices by a mid-20s figure. NAND shipments actually slipped, because the company chose higher-value enterprise storage over volume. A richer product mix added to the gain. Server DDR5 sales rose sharply, HBM4 shipments began in earnest, and sales of 321-layer TLC enterprise SSDs for data centers grew.

The move from HBM3E to HBM4 is the detail that matters most for 2027. SK hynix will run its M15X fab in Cheongju at full capacity by year-end. It expects HBM4 to overtake HBM3E in both shipments and revenue in the fourth quarter. Executives said customer demand for HBM is more than double the available supply, and that 2027 pricing has already been agreed with major customers. The company starts from strength: its US registration statement, citing IDC, put its HBM market share at 56.4% by revenue in the first quarter. Management also guided to a mid-20s percentage rise in DRAM shipments in the fourth quarter, so the next leg of growth should come from volume as well as price.

What the Net Line Conceals

Net profit moved the other way, falling 58% from the second quarter to ₩39.8 trillion. Neither quarter is a clean comparison. In the second quarter, gains on the company’s investments pushed net income above revenue, for a net margin of 118%. In the third, according to accounts of the earnings call, the company booked a ₩22.9 trillion valuation loss on investment assets and an ₩11.6 trillion foreign exchange loss, and the net margin fell to 38%. Neither figure says much about the business itself, which is why investors looked past it.

The balance sheet says more. Cash and equivalents rose ₩26.5 trillion in the quarter to ₩114.5 trillion. Borrowings fell to ₩15.8 trillion, leaving net cash of ₩98.7 trillion. That cash funds about ₩100 trillion in shareholder returns for 2026, roughly $75 billion. The plan includes at least ₩30 trillion in dividends and at least ₩60 trillion in buybacks and cancellations, a figure that counts the ₩40 trillion repurchase announced in August and completed on October 21. The third-quarter dividend is ₩20,000 per share, half of it a special payout from gains on the company’s stake in Kioxia. A further ₩20 trillion buyback will be split between cancelling shares and paying employees, with only the cancelled half counted as a return. Chief Financial Officer Kim Woo-hyun said the share price does not fully reflect the company’s profits and cash flow. A week earlier, on October 23, SK hynix said it had dropped plans to raise pre-IPO funding for, or float, Solidigm, its US NAND subsidiary. That removed a lingering worry about dilution.

Contracts in Place of Cycles

The case that the business has changed rests on contracts. SK hynix has signed long-term agreements with 14 major customers, including leading cloud providers, covering more than half of its 2027 and 2028 production capacity. Terms typically run five years, and several customers are discussing extensions. Prices float within ranges agreed in advance, so the contracts follow the market without exposing either side to its full swings. The company now expects memory supply to stay short through 2030, because leading-edge processes are hard to master and new fabs take years to build.

The goal is to soften the cyclicality that the company’s own prospectus describes plainly. The F-1 it filed with the SEC before its Nasdaq listing warns of “recurring periods of oversupply” and recalls a ₩9.1 trillion loss in 2023. It also shows how much depends on a few customers: the two largest accounted for 14.8% and 12.4% of revenue in the first quarter of 2026. Price bands cap the upside as well as the downside. The real test of any long-term agreement comes only when spot prices fall below the contracted range. Capital spending, meanwhile, will rise significantly in 2027 as the first phase of the Yongin cluster enters full operation. Management stressed that cleanrooms will open in stages and that investment will follow demand visibility. Samsung and Micron are adding capacity too.

A Market That Had Priced the Peak

The share price reaction showed how far sentiment had fallen. SK hynix closed at a record ₩2,919,000 on June 22, then lost more than half its value, touching ₩1,223,000 on October 20. Investors had begun to question whether returns on AI infrastructure would justify the spending behind them, and the company’s market value fell below ₩1,000 trillion. A recovery began with the Solidigm decision and gathered pace on October 27, when the stock rose 5.18% to ₩1,341,000 the day before results.

On Wednesday the shares rose more than 8% and were about 10% higher by early afternoon at ₩1,476,000, which put the company’s market value back above ₩1,000 trillion. The KOSPI rose as much as 6.47% to 6,003.22, above 6,000 for the first time in ten sessions. For a second straight day, the exchange halted computer-driven buy orders for five minutes. Samsung Electronics and Kioxia rallied too. Even after the move, the stock is worth only about half its June peak. That is well below the ₩3.24 million average brokerage target compiled by FnGuide. The market now accepts that SK hynix can earn at this level. Whether it can keep doing so is still an open question. The contracts, the cash and the ₩100 trillion return are the company’s case for durability. The next downturn will test it.