SK Hynix Sales and Profit Miss, Bears Roar
SK forecasts full-year capex to rise as much as 80% to high 40 trillion won range
Good Morning from Taipei,
SK Hynix bears may have been right.
Second-quarter operating profit climbed a mind-boggling 557% to a record 60.54 trillion won ($4.2 billion). But that was short of the 64.31 trillion won average of analyst estimates compiled by FactSet.
Revenue also missed. FactSet’s survey saw 84.17 trillion won, yet the world’s largest maker of high-bandwidth memory (HBM) only delivered 79.32 trillion won (also a record). Yonhap Infomax had similar estimates, so this wasn’t a sampling error.
Here’s what happened.
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The company grew 257% in aggregate, yet almost none of that growth came from HBM.
The re-rating of the stock is based on the assumption that HBM converts memory from a cyclical commodity business into a contracted, co-designed, defensible franchise. But the company's disclosure indicates that the AI capital expenditure cycle has instead pushed the revenue mix further toward commodity exposure, because conventional prices rose faster than contracted HBM. On these figures SK hynix enters the peak of the cycle with a larger proportion of revenue exposed to spot-referenced pricing than it carried at the start of the upturn.