SK hynix (NASDAQ:SKHY) reported record third-quarter 2026 results as demand for artificial-intelligence memory products lifted prices for DRAM and NAND flash, while the company outlined a broader shareholder-return program and said it expects supply constraints to persist across the memory market.
Revenue rose 32% from the prior quarter and 328% from a year earlier to KRW 104.6 trillion, marking the first time the company’s quarterly revenue surpassed KRW 100 trillion, CFO Kim Woo-hyun said. Operating profit increased 38% sequentially and 632% year over year to KRW 83.3 trillion, producing an operating margin of 80%.
Net income was KRW 39.8 trillion, after the company recorded KRW 32.6 trillion in net non-operating expenses. Those expenses included a KRW 11.6 trillion foreign-exchange-related net loss and KRW 22.9 trillion in valuation losses on investment assets, Kim said.
AI Memory Demand Drives Pricing and Product Mix
Kim said tight supply and demand conditions, driven by AI memory demand, supported substantial pricing gains in both DRAM and NAND for a second straight quarter. DRAM bit shipments increased about 10% sequentially, supported by AI-server sales and a more than 40% quarter-over-quarter increase in server DDR5 shipments.
The company began full-scale mass production and shipments of HBM4, its latest high-bandwidth memory product, during the quarter. DRAM average selling prices increased by the high-20% range, aided by conventional DRAM pricing and a larger share of higher-priced HBM4 products.
NAND bit shipments declined slightly as SK hynix emphasized higher-value products, including 321-layer TLC enterprise solid-state drives. However, NAND average selling prices rose in the mid-20% range as overall pricing strengthened and SSDs represented a greater share of sales.
For the fourth quarter, the company expects DRAM shipment volume to rise by the mid-20% range sequentially, as it expands its 1Z-nanometer process and raises HBM4 output through the M15X production ramp. It expects NAND bit shipments to grow by the mid-single digits sequentially.
Kim said HBM4 is expected to exceed HBM3E in both shipment volume and revenue share during the fourth quarter, becoming the company’s flagship HBM product. The company has completed negotiations with major customers covering next year’s HBM volumes and prices, he said.
Long-Term Agreements and Supply Constraints
Management said it sees AI infrastructure spending continuing despite investor concerns about the pace of monetization from AI deployments. Park Joondeok, head of DRAM marketing, said major hyperscale customers recently reported cloud-revenue growth of 30% to 80% year over year, which he said was substantially tied to their expanding AI businesses.
He also pointed to a broader mix of AI infrastructure investors, including enterprises and governments pursuing sovereign AI and on-premises systems. In his view, a more diversified customer base could reduce the impact of investment adjustments by any one large technology company.
SK hynix said it has entered long-term agreements with 14 key customers, including major global cloud service providers. Volumes under these agreements account for more than 50% of the company’s total capacity for 2027 and 2028. Park said volumes already secured under long-term agreements, together with demand being discussed with customers, mean its DRAM and HBM capacity through 2029 is “effectively sold out.”
The company expects supply to remain unable to fully meet customer demand in the near term, citing the complexity of leading-edge process technology and the time needed to construct new fabs. Kim said achievable demand growth in 2027 is expected to be in the mid-20% range for DRAM and the high-teens percentage range for NAND, similar to this year’s levels.
Investment Plans Remain Flexible
SK hynix expects capital expenditures in 2027 to increase significantly from 2026, driven by investments in leading-edge process capacity, the ramp of its first Yongin fab, and domestic and overseas infrastructure projects.
However, Kim said more fab construction does not necessarily translate directly into more memory supply, as high-performance products such as HBM require more production resources and bit-output gains from technology migration are becoming more limited.
The company plans to build foundational infrastructure ahead of anticipated long-term demand while adjusting equipment installation and mass-production ramps based on demand and profitability. For new fabs, including Yongin facilities and M17, SK hynix intends to speed construction of shell structures but open clean rooms in phases.
Shareholder Returns and Solidigm IPO Decision
Chief Executive Officer Kwak Noh-Jung said Solidigm discontinued its review of potential pre-IPO and IPO options after determining that recent financial-market volatility and a correction in semiconductor stocks would prevent an offering from delivering its anticipated benefits. Solidigm had considered external fundraising to support manufacturing expansion for AI data-center storage demand.
Kwak said SK hynix intends to return gains from its Kioxia investment through a special dividend. The company announced a shareholder-return plan of approximately KRW 100 trillion through fiscal 2026, including at least KRW 30 trillion in cash dividends and at least KRW 60 trillion in share acquisitions and cancellations.
The board approved KRW 14 trillion in cash dividends and KRW 20 trillion in share acquisitions for the third quarter. The dividend of KRW 20,000 per share includes KRW 10,000 tied to improved earnings and a KRW 10,000 special dividend related to Kioxia investment gains. SK hynix said KRW 10 trillion of the planned share acquisition is for shareholder returns and will be canceled in full, while another KRW 10 trillion is intended for executive and employee compensation.
About SK hynix (NASDAQ:SKHY)
SK hynix Inc is a South Korean semiconductor company that develops and manufactures memory products and related semiconductor solutions. Its portfolio includes dynamic random-access memory (DRAM), NAND flash memory, solid-state drives, and high-bandwidth memory (HBM) used in computing, artificial intelligence, data centers, smartphones, automotive systems, and other electronic devices.
The company serves customers globally through manufacturing, research, sales, and support operations in South Korea and other major technology markets.
