SK hynix (NASDAQ:SKHY) reported record second-quarter results for 2026, citing continued AI infrastructure investment, tight memory supply and higher pricing for DRAM and NAND products.
President of Corporate Center Song Hyeon-jong said consolidated revenue rose 51% from the prior quarter and 257% from a year earlier to KRW 79.3 trillion. Operating income increased 61% sequentially and 557% year over year to KRW 60.5 trillion, while operating margin rose five percentage points from the first quarter to 76%.
AI Memory and Enterprise SSD Demand Drive Growth
Song said demand for AI-related memory products, including high-bandwidth memory, server DRAM and enterprise solid-state drives, supported price increases across both major business lines.
DRAM bit shipments rose by a high-single-digit percentage in the quarter, led by HBM3E and AI server DRAM products. Average selling prices for DRAM climbed about 30%, supported by continued strength in conventional DRAM pricing. The company also cited significant sales growth for server LPDDR products, including SOCAMM2.
In NAND, bit shipments rose by a mid-teens percentage from a reduced first-quarter base, with enterprise SSD sales expanding. Enterprise SSD revenue doubled from the previous quarter, while Solidigm revenue from high-capacity enterprise SSDs of 30 terabytes and above increased more than threefold, according to Song. NAND average selling prices increased by a mid-50% percentage due to pricing strength across products.
Second-quarter depreciation and amortization totaled KRW 4 trillion, while EBITDA was KRW 64.6 trillion and EBITDA margin was 81%. The company reported KRW 62.2 trillion in net non-operating profit, including KRW 1.1 trillion in foreign-exchange-related net gains and KRW 63.3 trillion from sales and valuation gains on investment assets. Net profit was KRW 93.9 trillion.
Cash and cash equivalents, including short-term investments, reached KRW 88 trillion at quarter-end, up KRW 33.6 trillion from the end of the first quarter. Interest-bearing debt fell KRW 0.7 trillion to KRW 18.6 trillion, leaving net cash of KRW 69.4 trillion. The debt-to-equity ratio improved to 7%.
Supply Constraints Expected to Continue
Management said AI is broadening memory demand beyond HBM as agentic AI services require more server DRAM and generate additional demand for high-performance enterprise SSDs.
Song said the company expects DRAM demand to grow in the mid-20% range and NAND demand to grow in the high-teens percentage range amid constrained supply conditions. He said supply-demand balance is unlikely to improve meaningfully in the near term because of the complexity of advanced processes used for HBM and AI server memory, as well as the lead times for building new manufacturing facilities.
In response to concerns that more efficient AI models or data-center leasing could slow AI infrastructure spending, management said it views those developments as efforts to improve utilization and monetization of installed infrastructure rather than indications of a broad investment slowdown.
“We do believe AI infrastructure investment will remain solid beyond next year,” the company said during the question-and-answer session, pointing to competition among cloud service providers and the expansion of AI services. Management said efficiency improvements could broaden AI adoption by lowering the cost and accessibility barriers for users and applications.
Long-Term Agreements and Capacity Investments
SK hynix said it has completed long-term agreement, or LTA, negotiations with around 10 customers, including key customers, and is continuing talks with other major industry players. The company described the agreements as strategic partnerships intended to support supply stability and next-generation memory development rather than simply establish volume commitments.
Management said LTA terms are generally around five years, although conditions vary by customer and product. Agreements may include different pricing mechanisms to address price volatility, long-term purchase commitments and deposits intended to improve demand visibility and contract execution.
The company did not disclose what percentage of sales would be covered by LTAs. It said it plans to maintain an appropriate level that can provide earnings resilience while preserving flexibility to capture additional demand when market conditions improve.
For the third quarter, SK hynix expects DRAM bit shipments to increase by approximately 10% from the second quarter, led by server products. NAND bit shipments are expected to increase by a low-single-digit percentage sequentially.
To address demand, the company is accelerating production plans for M15X and plans to expand capacity after the Yongin Phase 1 clean-room opening in early 2027. It expects 2026 capital expenditures to reach the high-KRW 40 trillion range because of accelerated schedules and expanded investment.
The company also cited announced plans for P&T7, aimed at expanding advanced packaging capabilities, and M17, a new NAND production base. It said it will proceed with fab construction, equipment installation and capacity expansion in stages based on customer-demand visibility and investment efficiency.
HBM4 Ramp and NAND Portfolio Strategy
SK hynix said it began mass-production shipments of HBM4 in the second quarter and plans a full-scale production ramp in the second half. Management said current HBM4 yields and quality are approaching levels associated with the more mature HBM3E product. It has also delivered HBM4E samples to major customers and is targeting volume production beginning in 2027.
On HBM pricing, management said it is discussing 2027 supply volumes and pricing with key customers. It said conventional DRAM price gains may influence discussions, but HBM pricing also reflects wafer inputs, advanced manufacturing processes, TSV and packaging capacity, opportunity costs, technical complexity and the value delivered to customers.
For NAND, the company said it is expanding its portfolio of high-performance TLC enterprise SSDs, high-capacity QLC enterprise SSDs and high-performance SSDs using SLC mode. Management said AI storage requirements vary by workload, including latency, throughput, power, capacity and total cost of ownership.
SK hynix said its 321-layer product accounted for the largest share of NAND production in the prior quarter and is expected to represent about 50% of domestic NAND capacity by the end of the year.
The company also said it is reviewing additional shareholder-return measures. It did not disclose the format, amount or timing, but said it intends to communicate finalized plans to the market within the year.
About SK hynix (NASDAQ:SKHY)
SK hynix Inc is a South Korea-based semiconductor company that develops, manufactures, and sells memory products used in a wide range of electronic devices and computing systems. Its portfolio includes DRAM, NAND flash, and other memory solutions that support applications such as servers, PCs, mobile devices, and consumer electronics.
The company serves customers globally through the semiconductor supply chain and is recognized as one of the major memory chip producers in the industry.
