SK Hynix says memory shortages to persist until 2030

Korean memory-maker SK Hynix has predicted memory shortages will persist until at least the year 2030 and says that will help it to boost its already exceptional revenue and profits to new levels.

In remarks published on Wednesday alongside its quarterly results, the company offered its belief that “a virtuous cycle has taken hold in which AI-driven productivity gains and new revenue generation in areas such as software development, customer service, and search lead to greater AI adoption, which in turn drives increased investment in infrastructure.”

SK Hynix thinks this is great news, because it means more buyers are entering the market for AI infrastructure, including “general enterprises” and nations building sovereign infrastructure. In coming years, the company sees even more demand for memory coming from autonomous cars and the growing robotics market.

While the company is working hard to build more factories and get them working, execs admitted it can’t do that fast enough to meet demand.

“The company assessed that supply … is not keeping pace with the growth of the market,” SK Hynix told investors. “Given technical difficulty of leading-edge processes and the long lead time required to build new production facilities, it expects the structure in which demand exceeds supply to persist through 2030.”

It gets worse. SK Hynix has 14 long-term deals with 14 big buyers, who will collectively buy more than half of its output during 2027 and 2028, and some of them want to extend those agreements. The Korean giant doesn’t mind that because the deals include “a mechanism that reflects market conditions within a price range agreed upon with customers” and give it “a structure that secures stable profitability while allowing flexible responses to market changes.”

Those deals helped SK Hynix to record quarterly revenue of ₩104.6 trillion ($78.1 billion), up 328 percent year-over-year and 32 percent quarter-over-quarter. Operating profit came in at ₩87.68 trillion ($62.8 billion), up 486 percent year over year.

The company told investors it’s not done yet, outlining plans to expand production and emphasize lucrative products that will “scale up revenue and profit one step further next year.”

Doing so will likely dent profits elsewhere, because on the company’s earnings call, chief financial officer Kim Woo-hyun predicted “shipment volumes for PCs and mobile devices are expected to decrease due to cost burdens from rising memory prices and supply shortages.”

The company also outlined some of its future plans, among them:

• Increasing HBM4 production, which it believes will “surpass HBM3E in both shipment volume and revenue in the fourth quarter and … establish itself as a mainstream product.”
• “Rapidly” increasing the portion of its 10nm-class 6th generation (1c) process technology and expand sales of DDR5 and LPDDR5 SOCAMM for AI servers.
• Developing NAND “into a core solution that enhances the throughput and economic efficiency of AI services, based on HBF and system optimization technologies.”

Investors liked what they heard, with some apparently seeing the memory-maker’s outlook as suggesting the AI boom won’t sputter out any time soon and sent the company’s share price up by about three percent in after-hours trading. ®