SK Hynix Posts Record Profit, Sells Half Its Output Through 2028

SK Hynix reported $78.4B (₩104.6 trillion) in revenue on Wednesday morning in Seoul. It was the company's first quarter above ₩100 trillion; figures are converted at about 1,335 won per dollar.

Operating profit came to $62.4B (₩83.3 trillion), up 632% from a year earlier. The operating margin rose to 80%, meaning $80 of every $100 of memory sold stayed as operating profit.

The Kospi closed up 6.6% at 6,012.4. SK Hynix gained 10.9% to 1,487,000 won (about $1,114), lifting its market value to roughly $813B.

Profit Beat Forecasts by About 8%

The FnGuide average forecast in Korea was $57.7B in operating profit; Bloomberg's consensus was $58.1B. Against those two measures, the beat ranges from 7.5% to 8.3%.

The drop in net income did not come from operations. Second-quarter net income of $70.4B had been inflated by a gain on the Kioxia stake, which did not repeat this quarter.

The company does not report segment profit. Cash rose to $85.8B, leaving $73.9B in net cash after borrowings.

Price Carried the Growth

DRAM bit shipments rose about 10% as planned, while the average selling price climbed in the high-20% range. Server DDR5 shipments rose more than 40% from the second quarter.

NAND bit shipments fell slightly while prices rose in the mid-20% range. The company is shifting capacity toward enterprise SSDs.

In HBM (high-bandwidth memory), volume production and shipments of HBM4 began this quarter. The company expects HBM4 to overtake HBM3E in both volume and revenue in the fourth quarter.

What set this report apart from earlier records was not the profit but the calendar. The company said half of its volume is now under contract through 2028.

Ninety Percent of New Revenue Became Profit

A memory fab's costs are largely fixed: depreciation, labor, energy. When prices rise those costs stay put, so the increase flows almost directly to profit.

This leverage works both ways. When prices fall, costs still stay in place and profit shrinks faster than revenue, which is why memory stocks swing so hard.

Long-Term Contracts Soften the Cycle

SK Hynix signed long-term agreements with 14 customers, including major cloud providers. The contracts cover more than half of its 2027 and 2028 production capacity.

According to the company's release, the contracts are typically five years long, with prices set within a pre-agreed range that reflects market conditions. Volume is locked; price is neither free-floating nor fixed.

That limits the downside of the leverage described above. The company says DRAM and HBM volumes are effectively sold out through 2029 and expects the shortage to last until 2030.

$74.9B for Shareholders

The company set a 2026 shareholder return target of about $74.9B (₩100 trillion). At least $22.5B is cash dividends and at least $44.9B is buybacks and cancellations.

The third-quarter dividend is 20,000 won a share, half of it a special payout from the Kioxia gain. A new $15.0B buyback also starts, half of which will be cancelled.

Foreign investors bought a net $611M of Kospi shares while individuals sold a net $1.35B. The stock had fallen about 30% over three months; sources tie the rally to the profit beat and the return plan without weighting them.

In Japan, Kioxia rose more than 10%. In US after-hours trading, SK Hynix's ADR gained 4% to 6% and Micron about 3%.

The chart is live and counts back from today; it frames Micron's three-month path and does not by itself show this report's effect.

What It Means for Investors

• The market priced the profit beat and the long-term contracts; it could not price the floor of the contract price range, which was not disclosed.
• Counterpoint says SK Hynix controls 50%-58% of HBM supply; the same contract model could mean price visibility for Micron, SanDisk and Western Digital.
• On October 29, Samsung's HBM and memory segment profit will be the first number showing whether the rival is holding price.
• The risk to the thesis is an AI spending slowdown pulling down prices on the half of capacity outside the contracts.

This story is based on SK hynix's October 28 earnings release and the earnings call transcript on Investing.com. Forecasts are the FnGuide and Bloomberg figures reported by Seoul Economic Daily, BigGo and Investing.com. Seoul closing data come from Aju Press; intraday flows and the exchange rate come from Reuters via Business Recorder. ADR and Micron moves rely on Investing.com reports and vary between sources. Results are preliminary; the external audit review is not complete.