SK Hynix's operating profit falls short of expectations, capital expenditure expected to be at least US$31 billion
SK Hynix's second-quarter operating profit increased 557%, but still fell short of expectations. The company will spend at least $31 billion in capital expenditures this year, and concerns about overinvestment in artificial intelligence capacity are growing. The company expects capital investment to increase by about 50% to at least 45 trillion won (about 31 billion U.S. dollars). Driven by the continued tight supply of global memory chips, SK Hynix When customers raised prices, its June quarter profit margin exceeded 80% and hit a high. However, SK Hynix's share price fell 11% in Seoul on Wednesday, reflecting both the market's extremely high expectations for core companies in the artificial intelligence industry and investors' growing concerns about Meta Platforms Inc. Data centers built by large technology companies may exceed actual demand. South Korea's stock market benchmark index KOSPI fell for a second consecutive day. SK Hynix executives played down those concerns on Wednesday, telling investors that the company was signing long-term contracts with customers and that there was no sign of an end to the explosive growth in demand. Executives reiterated SK Group Chairman Choi Tae-won's view that market demand will exceed supply until at least 2030. The company is currently preparing to deliver batches of its next-generation high-bandwidth memory HBM4E chips to its major customer NVIDIA. "Investor expectations may be a little too high," said Jason Lemire, investment director at Bold Wealth Partners. "However, we need to put these results in perspective. These performance numbers are indeed stunning. The company is currently operating at full capacity and facing huge demand pressure, so it has decided to significantly increase capital expenditures." SK Hynix reported an operating profit of 60.5 trillion won (approximately US$42 billion) in the June quarter, lower than the average analyst forecast of 64.2 trillion won. Revenue was 79.3 trillion won, while the market average estimate was 83.9 trillion won. Thanks to one-time investment gains, the company's net profit soared 1,242%, an increase that exceeded market expectations.