SK Hynix’s Operating Profit Jumps 557% but Misses Forecasts Amid South Korea’s Chip Rout

SK Hynix, the South Korean memory chipmaker and a key supplier to Nvidia, reported a record operating profit in the second quarter but missed market forecasts after delays in deliveries of its latest AI memory chips held back sales. Its shares fell nearly 20% before recovering to close 9.6% lower at ₩1.401 Mn on July 29.

Operating profit rose 557% from a year earlier to ₩60.54 Tn, or about $41.6 Bn, in the three months ended June 2026. That was below the ₩64 Tn forecast compiled by LSEG SmartEstimate. Revenue climbed 257% to a record ₩79.32 Tn but missed the ₩84 Tn estimate.

Its operating margin widened to 76% from 41% a year earlier, underscoring the strength of the memory chip market despite the forecast miss. First-half revenue also crossed ₩100 Tn for the first time as higher prices and demand for chips used in AI servers lifted the business.

Analysts said the shortfall partly reflected slower-than-expected shipments of HBM4, which allows AI processors to access large volumes of data rapidly. The delay pushed the recognition of some sales beyond the quarter. SK Hynix also benefited less than some rivals because prices for specialised AI memory rose more slowly than those for conventional memory chips.

SK Hynix began mass shipments of HBM4 in the second quarter and plans to increase production in the second half of 2026. The company said the chips had reached the operating speeds required by customers while delivering improved power efficiency and cost competitiveness.

The earnings disappointment came as South Korean stocks fell for a second consecutive session. South Korea’s benchmark KOSPI stock index closed 6% lower on July 29 after tumbling nearly 11% a day earlier, leaving it almost 40% below a peak reached little more than a month earlier. At its lowest point on July 29, the decline from that peak had wiped as much as $2.18 Tn from Seoul’s equity market.

Heavy losses in SK Hynix and Samsung Electronics dragged the wider South Korean market lower. Samsung fell as much as 14% on July 29 before recovering to close 5.2% lower. Together, the two chipmakers account for more than half of the KOSPI’s weighting, magnifying their impact on the benchmark index.

The decline was amplified by single-stock leveraged exchange-traded funds, which are designed to multiply the daily rise or fall of an individual share. South Korean retail investors had poured money into products linked mainly to Samsung and SK Hynix during the AI-driven rally, and the funds added selling pressure as the two stocks fell sharply.

The sell-off also reflected growing doubts over whether the world’s largest technology companies can sustain hundreds of billions of dollars of planned AI infrastructure spending. Investors have become concerned that companies may rent data centre capacity instead of building facilities and that more efficient AI models could require less memory to perform the same tasks.

SK Hynix said those developments reflected an effort to make better use of infrastructure already built and generate revenue from it, rather than a broad retreat from AI investment. The company said major customers continued to request more memory and argued that revenue from commercial AI services would support further spending.

The chipmaker has finalised long-term supply agreements with about 10 customers and is negotiating additional contracts with other large buyers. The deals typically run for five years and include financial safeguards such as deposits, giving SK Hynix greater certainty over future orders but potentially limiting some gains when shortages drive prices sharply higher.

The company plans capital spending in the upper ₩40 Tn range this year, up from ₩30.2 Tn in 2025, as it increases production to meet demand. It is accelerating output at its M15X facility and plans further expansion after the first cleanroom at its Yongin semiconductor complex opens in early 2027.

Its net profit surged 1,242% to ₩93.92 Tn, exceeding quarterly revenue, but much of the increase did not come from the chip business. The figure included ₩63.3 Tn in gains from investment assets, which analysts largely attributed to the completion of SK Hynix’s sale of its interest in Japanese flash memory maker Kioxia.

Record earnings strengthened the balance sheet, with cash and cash equivalents reaching ₩88 Tn at the end of June and debt falling to ₩18.6 Tn. That left SK Hynix with net cash of ₩69.4 Tn, although the company provided no details on the timing, size or structure of the shareholder-return plan it intends to disclose later this year.

The immediate test is whether higher shipments of HBM4 in the second half can turn strong customer demand into results that meet the market’s elevated forecasts. Investors will also be looking for clearer evidence that AI infrastructure spending can produce durable returns and for details of how SK Hynix intends to deploy its growing cash balance.