According to Woofun AI, on October 28, SK hynix (SKHY.US) released its third-quarter financial report, presenting a complex picture of divergence between revenue and net profit. Although AI server demand drove both revenue and operating profit to new quarterly records, with the two figures surpassing LSEG consensus estimates of 98.34 trillion and 76.72 trillion won respectively, net profit fell short of the consensus compiled by data provider FnGuide, drawing market attention.
On the revenue side, growth was explosive, reaching 104.62 trillion won for the quarter, crossing the 100 trillion won single-quarter threshold for the first time. This figure even exceeded the company's total revenue for the entire year of 2025 (97.15 trillion won). Looking back to the final quarter of last year, SK hynix revenue was only 32.83 trillion won. After three consecutive quarters of climbing, the latest quarter's scale is more than triple that level. This structural change stems from AI memory demand driving up prices of major products, as well as improved competitiveness of high-value-added products.
In terms of product mix, DDR5 sales for servers increased significantly, the new-generation high-bandwidth memory HBM4 began official shipments, and enterprise-grade solid-state drives used in data centers also saw expanding sales. It is worth noting that HBM is not the only growth engine; comprehensive server demand for high-speed memory and other types of storage devices jointly supported the results.
Regarding order lock-in, SK hynix has signed long-term agreements with 14 major customers, locking in volumes equivalent to more than half of total capacity for 2027 and 2028. These five-year contracts reflect market conditions within agreed ranges in terms of pricing and are not permanently fixed at today's prices. On capacity planning, the company plans to increase output at its M15X plant before the end of the year to boost HBM4 supply, and expects HBM4 shipments and revenue in the fourth quarter to both exceed those of the previous generation HBM3E, though actual results still need to be verified in subsequent financial reports.
The sharp rise in profit margin further confirms the strength at the operating level. Calculated as operating profit divided by revenue, a year ago every 100 won sold left about 47 won in operating profit, while in the latest quarter that figure reached 80 won. Operating profit, after deducting operating costs and expenses, provides a window into core operations. Over the past several quarters, revenue and operating profit rose in tandem, with the latter growing faster, meaning profit generated per unit of revenue is increasing.
However, net profit performed very differently. Third-quarter operating profit reached 83.33 trillion won, up 38% quarter-on-quarter, but net profit was only 39.78 trillion won, down 58% from 93.92 trillion won in the second quarter. This discrepancy was not caused by weakening chip sales, but by non-operating factors such as investment gains. Yonhap News TV, affiliated with Yonhap News Agency, previously reported that second-quarter net profit included investment gains from Japanese memory chip company Kioxia, resulting in an abnormally high base. Although the third-quarter announcement mentioned that the company would share Kioxia investment gains through a special dividend, it did not fully list non-operating items and tax changes, so the net profit decline cannot be entirely attributed to this. What can be confirmed is that the previous quarter's investment gains made the comparison base unusual, while operating profit continued to grow this quarter. Data compiled by Woofun AI shows that such fluctuations in financial structure reflect the significant disturbance of non-recurring gains and losses on net profit.
Shareholder return plans became another focus. SK hynix stated that for fiscal year 2026 it plans to return approximately 100 trillion won to shareholders, including no less than 30 trillion won in cash dividends and no less than 60 trillion won in share buybacks and cancellations. The previously announced 40 trillion won buyback was completed last week, and the related shares will be cancelled soon. The board also decided on an additional buyback this time, with shares used for employee compensation not counted in the above total shareholder return. In terms of dividend composition, for the third-quarter per-share dividend, half corresponds to improved operating performance, while the other half is a special dividend sharing Kioxia investment gains. This arrangement reflects both the company's confidence in core business growth and its strategy of enhancing shareholder value through investment returns.
With HBM4 ramping up and long-term orders locked in, SK hynix occupies a favorable position in the upward trend of the memory cycle, but the volatility of net profit reminds investors to distinguish recurring gains and losses from non-recurring income to more accurately assess its long-term profitability. This marks another important practice by the semiconductor giant in financial disclosure transparency and shareholder return mechanisms, following the AI-driven surge in memory demand.
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