SK Hynix just hit a massive jackpot. The South Korean chipmaker reported on Wednesday that its quarterly profits more than doubled, reaching an all-time high that blew past what experts predicted. As a key supplier for Nvidia, the company is riding the wave of the artificial intelligence boom, and investors sent the stock price jumping 9% in after-hours trading.
The world’s obsession with AI is the main reason for these eye-popping numbers. Companies everywhere are desperate for high-bandwidth memory chips to power their AI systems, and SK Hynix currently controls about 61% of that market. This intense demand has sent prices through the roof. In fact, the cost for some common types of computer memory actually quadrupled over the last year.
The company is sharing the wealth with its investors. It announced plans to cancel about $8.5 billion worth of its own shares, a move that makes the remaining stock more valuable. SK Hynix is also looking toward the future by committing $10 billion to a new U.S.-based venture, currently called “AI Company,” which will focus entirely on new AI investments.
However, this focus on AI might be bad news for people looking to buy a new phone or laptop. SK Hynix admitted that it is prioritizing the giant data centers that run AI over the gadgets regular people use. Because supply is getting so tight and prices are rising, the company expects the market for PC and smartphone chips to grow much more slowly than the AI sector.
While SK Hynix is the king of the mountain right now, the competition is heating up. Its main rival, Samsung Electronics, is racing to catch up and plans to start producing its own next-generation AI chips as early as next month. Analysts expect Samsung to put up a tough fight this year, but for today, SK Hynix is celebrating its best performance in history.
