In the second quarter of this year, SK hynix [000660] maintained top-tier profitability in the semiconductor industry, recording an operating profit margin of 76%, which surpassed that of Taiwan’s TSMC, the world’s largest foundry (semiconductor contract manufacturing) company.

Analysts suggest that the AI memory "super-cycle" is extending as prices for not only high-bandwidth memory (HBM) but also commodity DRAM and NAND flash have risen significantly.

SK hynix announcing the commencement of Nasdaq ADR trading [Seoul=Yonhap News]

SK hynix announced on the 29th that it recorded 79.3187 trillion won in revenue and 60.5426 trillion won in operating profit for the second quarter of this year.

The operating profit margin reached 76%, a 4 percentage point increase from the previous quarter (72%), setting a new all-time high. This means the company generated a profit of approximately 7,600 won for every 10,000 won of products sold—a level rarely seen in the manufacturing sector.

Notably, the company has outperformed TSMC, the leading foundry that had boasted the highest profitability in the semiconductor industry for three consecutive quarters since the fourth quarter of last year, in terms of operating profit margin.

TSMC’s operating profit margin for the second quarter of this year was 60.3%, maintaining a gap of approximately 15 percentage points between the two companies.

Previously, SK hynix’s operating profit margin had plummeted to around -67% in the first quarter of 2023, but it has been on an upward trajectory every quarter since turning a profit of 3% in the fourth quarter of the same year.

This strong performance is attributed to the combined effects of increased HBM sales and rising prices for commodity DRAM and NAND.

Industry experts note that the memory supply shortage persists as the AI memory market shifts toward long-term agreements (LTAs).

As major companies have concentrated their production capacity on HBM and expanded LTAs with major U.S. tech firms, the supply of commodity memory has become constrained. Consequently, this supply tightness has led to price increases and improved profitability.

The increase in demand for enterprise SSDs (eSSD), driven by expanded AI data center investments by North American cloud service providers (CSPs), has also contributed to these results.

According to market research firm TrendForce, contract prices for commodity DRAM and NAND rose by 58–63% and 55–60%, respectively, compared to the previous quarter, creating a "seller's market." Furthermore, as the margins on commodity DRAM reached levels surpassing those of HBM, the company’s overall profitability was maximized.

It is understood that HBM accounts for about 30% of SK hynix’s total DRAM shipments, with the remainder consisting of commodity products.

Commodity DRAM is generally defined as all DRAM products excluding HBM, ranging from the latest products such as DDR5, LPDDR5X, and GDDR7 to older products like DDR4.

In addition, Samsung Electronics, which announced its preliminary results earlier this month, is also estimated to have recorded an operating profit margin of over 60% in its memory division, indicating that both of Korea’s memory giants are maintaining a trend of ultra-high profitability.

SK hynix participating in GTC 2026 [Seoul=Yonhap News]

The company’s financial structure has also improved significantly. After increasing its net cash (a state where cash equivalents exceed borrowings) to 35 trillion won by the end of the first quarter, SK hynix further expanded its investment capacity in the second quarter based on its strong cash-generating ability.

As of the end of the second quarter, the company's cash equivalents were approximately 88 trillion won, an increase of over 33 trillion won from the end of the previous quarter (54.3 trillion won).

Conversely, the scale of borrowings decreased. During the same period, debt fell by approximately 700 billion won to 18.6 trillion won, resulting in a net cash position of 69.4 trillion won.

SK hynix achieved a net cash position for the first time in the third quarter of last year, having been in a net debt position since the second quarter of 2019. As of the end of last year, the company’s net cash stood at approximately 12.7 trillion won.

The company plans to invest these secured funds into the Yongin Semiconductor Cluster, the ramp-up of the Cheongju M15X fab, the P&T7 packaging plant, the M17 NAND production facility, and the expansion of next-generation HBM production capacity.