Asia

Artificial Intelligence boom: SK Hynix runs out of chip production until 2026

The boost in demand from AI is pushing SK Hynix's shares to record levels.

29 October 2025

3' min read

Translated by AI

Versione italiana

Key points

The chip race
Demand growth outstrips supply
A growing market in the medium term

3' min read

Translated by AI

Versione italiana

South Korean SK Hynix has exhausted all of its chip production for next year and plans to significantly increase investment, anticipating a prolonged "super cycle" of chips, spurred by the boom of artificial intelligence, it said on Wednesday after reporting a record quarterly profit.

The company, a supplier to leading artificial intelligence chip vendor Nvidia, said that growth in memory chip supply is likely to be limited, just as demand is rising sharply, with customers looking to expand investment in data centre infrastructure for artificial intelligence.

SK Hynix shares rose as much as 6 per cent after the record profit, outperforming the 1.5 per cent increase in the benchmark Kospi index.

The chip race

A growing number of customers are rushing to lock in supplies in response to the chip shortage, placing orders for next year in advance and pushing for long-term contracts, the company said. At the same time, the shift to high-bandwidth memory (Hbm) production has put a strain on conventional memory production, such as Dram, and "total production will inevitably remain limited," said Kim Kyu-hyun, SK Hynix's Dram marketing manager. "This structural constraint on Dram supply is expected to sustain the current prolonged memory super-cycle, as supply growth lags behind accelerating demand," the manager said.

SK Hynix reported a record operating profit of 11.4 trillion won (USD 8.02 billion) for the July-September period, up 62% year-on-year and in line with Lseg SmartEstimate forecasts.

Quarterly sales increased by 39% in the third quarter to 24.4 trillion won.

Demand growth exceeds supply

SK Hynix, as mentioned, has already met full customer demand for the entire production of Dram, Hbm and Nand for next year, and expects to start shipping next-generation Hbm4 chips in the fourth quarter of this year. When asked about Hbm prices for next year, the company said it would be able to maintain profitability on its products.

The chipmaker predicts that Dram shipments will grow by more than 20% year-on-year in 2026.

"DRAM stocks have dropped to extremely low levels and, for Ddr5 products, newly manufactured chips have to be shipped immediately to customers to meet demand," said Kim.

While thriving in a strong market for conventional memory, the company is keen to maintain its edge in advanced AI chips supplied to Nvidia, in the face of growing competition from rivals such as Samsung Electronics and Micron. SK Hynix said it has completed negotiations with key customers on the supply of Hbm for 2026, and plans to fully expand sales of Hbm4 products next year.

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A growing market in the medium term

According to the company, the Hbm market will register an annual growth of more than 30% over the next five years, supported by increased investments by large technology and artificial intelligence companies, even from a conservative perspective.

The company added that its recent letter of intent with the ChatGPT manufacturer, OpenAI, to supply Hbm, underlines the strong demand for artificial intelligence-based products and the crucial importance of securing Hbm products.

With growing confidence in the revenue potential of the artificial intelligence market, global companies in the industry are increasing their investment spending, Kim said, leading to rapid growth in demand for a wide range of memory products, including Hbm, Ddr5 and enterprise SSDs.

To meet this demand, an increase in investment across the entire memory sector is inevitable, and SK Hynix said it expects its spending to increase substantially from this year's level, without specifying a figure. Thanks to its lead in advanced chips, SK Hynix's shares are up 200% this year, outpacing the 87% increase in Samsung shares and the 67% increase in the Kospi benchmark.