SK Hynix, the world’s second-largest memory chipmaker, reported a fivefold surge in operating profit to $25.4bn for Q1 2024, driven by booming AI demand. The South Korean firm’s revenue tripled to Won52.6tn ($40.5bn), outpacing analyst expectations. CEO Joon Deok Park emphasized a “structural shift” in the sector, with customers prioritizing supply security over cost amid persistent shortages.

SK Hynix plans to invest $8bn in extreme ultraviolet lithography machines from ASML to expand capacity, reflecting long-term bets on AI-driven growth. The company faces tight supply constraints, as demand for high-bandwidth memory (HBM) chips used in AI processors exceeds production capabilities. Competitors like Samsung and Micron are also ramping up investments, with Samsung targeting a Won110tn ($86bn) expansion this year.

SK Hynix dominates the HBM market with 57% share, per Counterpoint Research, as data center expansion fuels prices for both AI and conventional memory. Analysts note the upcycle may extend beyond 2028, citing long-term contracts locking in demand. Geopolitical risks, including Middle East tensions, have raised energy costs but pose limited supply chain disruptions, per SK Hynix.

Shares have surged 90% year-to-date, underscoring investor confidence in sustained growth.