SK Hynix's Third-Quarter Revenue Exceeds 1 Trillion Won for the First Time, and It Announces a Shareholder Return Plan of About 1 Trillion Won

SK Hynix splashes out hundreds of trillions of won to reward shareholders.

Memory manufacturers are still continuing to "create wealth."

On October 28, SK Hynix released an additional shareholder return plan, under which it will carry out shareholder returns of about 100 trillion won (approximately RMB 502.9 billion) in fiscal year 2026.

On the same day, SK Hynix disclosed its fiscal year 2026 third-quarter financial report for the period ended September 30, 2026. In the third fiscal quarter, the company's operating revenue was 104.6155 trillion won, breaking through the 100 trillion won mark for the first time; operating profit set a new quarterly historical record, up 632% year on year.

As a beneficiary of the AI boom, SK Hynix did not hide its optimistic expectations for the future in its financial report. The company believes that although rising memory prices and tight supply have increased cost pressure on PC and smartphone manufacturers and may lead to a decline in terminal shipments, growing demand for AI infrastructure will offset this impact and drive the continued expansion of the entire memory market.

Based on this expectation, SK Hynix plans to expand HBM4 production before the end of the year and increase the supply and sales of products such as LPDDR5 SOCAMM for AI servers. At the same time, the company is signing long-term supply agreements with major customers to lock in production capacity for the coming years in advance.

Operating profit surges 6-fold

With AI momentum in full swing, SK Hynix's performance keeps setting new records.

The financial report shows that in the third quarter of fiscal year 2026, SK Hynix's operating revenue was 104.6155 trillion won and operating profit was 83.3338 trillion won, both setting new quarterly historical records, with operating revenue exceeding the 100 trillion won mark for the first time. Among them, operating revenue rose 32% quarter on quarter; operating profit rose 38% quarter on quarter and 632% year on year.

At the same time, SK Hynix's profitability is continuing to reshape the market's understanding of the memory chip industry. In the third fiscal quarter, the company's operating profit margin was 80%, 33% higher than the same period last year and up another 3 percentage points from the previous quarter. In other words, for every 100 won of operating revenue SK Hynix generates, it can produce about 80 won of operating profit.

However, net profit failed to keep pace. In the third quarter, SK Hynix's net profit was 39.7756 trillion won, up 216% year on year but down 58% quarter on quarter, with a net profit margin of 38%.

Some of SK Hynix's financial data for fiscal year 2026. Image/SK Hynix financial report

Judging from the data disclosed in the financial report, the quarter-on-quarter decline in net profit was affected by non-operating losses. In the third quarter, the company recorded 32.625 trillion won in non-operating losses, including losses related to exchange rate changes and losses related to investment assets. In addition, the high net profit in the previous quarter was also related to the one-time investment gain recognized from the sale of Kioxia shares in that period.

Compared with the fluctuation in net profit, the core memory chip business maintained strong growth. From the perspective of product structure, DRAM remained SK Hynix's main source of revenue, contributing 75% of revenue in the third quarter, up 2 percentage points from the previous quarter; NAND business revenue accounted for 24%, down 3 percentage points from the previous quarter.

The company's revenue structure is also tilting toward AI and data center-related products. By downstream application, the share of servers in DRAM revenue continued to rise, the share of SSDs (solid-state drives) in NAND revenue also increased, while the share of mobile products in both businesses declined.

As for specific products, SK Hynix said in its financial report that with HBM4 shipments fully ramping up, server-oriented DDR5 sales grew substantially, driving DRAM business growth; on the NAND side, sales of 321-layer TLC enterprise solid-state drives (eSSD) continued to expand, and demand for high-value-added data center-related products remained strong.

More than half of production capacity locked up for the next two years

"The supply-demand imbalance is expected to continue until 2030." SK Hynix maintained an optimistic market outlook for the coming years in its financial report.

In SK Hynix's view, there is still ample room for growth in memory chip demand. In the short term, enterprise AI and personal AI will become the main growth drivers; in the medium to long term, physical AI (Physical AI) applications such as autonomous driving and robotics are expected to bring more demand.

Even if rising memory chip prices and tight supply increase cost pressure on PC and smartphone manufacturers and may lead to a decline in terminal shipments, SK Hynix believes that growth in AI infrastructure demand is enough to offset this impact and drive the continued expansion of the entire memory market.

Demand continues to grow, but on the supply side it takes time to build plants and ramp up production. SK Hynix analyzed in its financial report that because advanced process technologies are becoming increasingly difficult and building new production facilities takes a long time, the supply side has failed to keep up with the market's growth rate.

Based on its optimistic expectations for the memory market, SK Hynix disclosed its next capacity expansion plans in the financial report. On the DRAM side, the company plans to increase the proportion of its sixth-generation 10-nanometer-class (1c) process and increase sales of DDR5 and LPDDR5 SOCAMM for AI servers.

HBM is also a key focus of capacity expansion. The company plans to raise capacity at its M15X plant to the maximum level before the end of the year to expand HBM4 production. Accordingly, the company expects HBM4 to surpass HBM3E in both shipments and operating revenue in the fourth quarter and become its new main product.

In NAND flash, the company plans to raise the share of its 321-layer process to more than 50% of its domestic South Korean capacity in the fourth quarter, thereby increasing the supply of high-performance, high-capacity eSSDs. Over the medium to long term, the company plans to build on High Bandwidth Flash (HBF) and system optimization technologies to make NAND flash a core solution for improving the throughput and cost-effectiveness of AI services.

Capacity expansion takes time, but customers have already locked in supply for the coming years in advance. The financial report shows that SK Hynix is expanding long-term supply agreement cooperation with customers and has now signed agreements with 14 major customers, including large global cloud service providers. The agreements are typically for five years, and the company is also discussing extending the cooperation period with some customers.

As of now, the supply volume locked in by these long-term agreements has covered more than 50% of SK Hynix's total capacity for 2027 and 2028.

For SK Hynix, the current situation is both "not enough to sell" and "no worry about selling." However, how long this favorable market can last still depends on whether the AI investment boom can continue.

Spending about 100 trillion won to reward shareholders

With strong performance, SK Hynix also appears exceptionally generous in rewarding shareholders.

On October 28, the company announced that it will carry out about 100 trillion won in shareholder returns for fiscal year 2026, including more than 30 trillion won in cash dividends and more than 60 trillion won in share buybacks and cancellation. Among them, the 40 trillion won share buyback announced in August this year was completed last week, and the relevant shares are about to be canceled.

At the board meeting held that day, SK Hynix further decided to pay 14 trillion won in third-quarter cash dividends and repurchase 20 trillion won of treasury shares. Of the treasury shares to be repurchased, 10 trillion won intended for shareholder return purposes is planned to be fully canceled, while the remaining about 10 trillion won will be used for employee performance bonuses and will not be counted in the scale of shareholder returns.

The third-quarter dividend is 20,000 won per share, including a dividend of 10,000 won per share based on improved operating performance and a special dividend of 10,000 won per share from investment gains related to Kioxia.

In other words, this large-scale shareholder return does not come entirely from the main memory chip business.

SK Hynix said the company plans to return to shareholders most of the gains it achieved this year through its investment in Japanese memory chip manufacturer Kioxia. This means that, in addition to the rapid growth of the AI memory business, industrial investment has also begun to contribute considerable capital returns to the company.

At the same time, the company's cash reserves are still increasing. The financial report shows that as of the end of the third quarter, SK Hynix held 114.46 trillion won in cash and cash-like assets, an increase of 86.61 trillion won from the same period last year and an increase of 26.5 trillion won from the previous quarter.

With abundant cash in hand, SK Hynix is using large amounts of funds for dividends and share buybacks while also preparing for the next round of capacity expansion.

However, the memory chip industry has always had a distinct cyclical nature. With AI demand currently strong and product prices rising, SK Hynix is still stepping up capacity expansion, and most of its capacity for the next two years is already covered by long-term agreements. When the newly built capacity is gradually released, whether AI demand can continue to maintain such a growth rate remains a question of market concern.

Judging from this financial report alone, SK Hynix has no intention of slowing down.

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