SK Hynix reported a record sixfold jump in quarterly profit on Wednesday, July 29, 2026, yet its shares plummeted up to 15% after missing lofty investor expectations and announcing a capital spending plan of at least $31 billion to expand artificial intelligence chip production.
Record Revenue and Operating Profit Soar on Surging AI Demand
South Korean memory chipmaker SK Hynix reported bumper quarterly results for the April-June period, driven by an unprecedented surge in demand for artificial intelligence hardware. Revenue jumped 257% year-on-year to 79.32 trillion won ($54.55 billion), while operating profit soared nearly 557% to reach 60.54 trillion won. For the first time in company history, cumulative revenue for the first half of the year exceeded 100 trillion won.
Despite the historic expansion, the figures fell short of analyst forecasts compiled by LSEG SmartEstimates, which had projected revenue of 84 trillion won and an operating profit of 64 trillion won. That minor miss, paired with aggressive capital expenditure projections, triggered a sharp market reaction. Shares in the company slumped over 15% on Thursday following a 13% drop on Wednesday, reflecting broader Wall Street anxieties about the sustainability of heavy infrastructure spending by major technology firms.
Massive $31 Billion Capital Outlay and Pricing Power Dynamics
To support expanding memory requirements for data centers and consumer electronics, SK Hynix earmarked at least $31 billion in capital spending for the year. The company expects its capital investments to rise by roughly 50% to at least 45 trillion won, stepping up from 30.2 trillion won spent in 2025. Company leadership defended the spending spree, noting that robust revenue generated by AI services is expected to keep memory demand momentum intact.
Josh Gilbert, lead analyst for APAC at eToro, observed that SK Hynix achieved an operating gross margin of 83% during the quarter, demonstrating that producer pricing power remains intact. That doesn’t exist in a market where demand is drying up; it exists in one where customers are fighting over supply,
Gilbert told CNBC.
At the same time, analysts noted that domestic rival Samsung Electronics exhibits even stronger pricing power and has raised prices more aggressively. SK Hynix’s exposure to high-bandwidth memory chips also meant that prices rose less steeply than conventional memory during a period when shipments of certain advanced products faced minor delays.
Long-Term Supply Deals and the Race to Stabilize Volatility
In an effort to insulate its business against the memory sector’s notorious demand cycles, SK Hynix has concluded talks on roughly 10 long-term supply agreements with major customers. These multi-year arrangements—typically spanning five years—incorporate financial safeguards such as customer deposits to guarantee contract enforcement.
President Song Hyun-jong confirmed during an earnings call that clients continue to request additional supplies. However, analysts pointed out that while these long-term pacts improve demand visibility, they can also temper near-term price gains, contributing to the quarterly profit shortfall.
Shareholder Return Anxieties and Net Cash Milestones
Buoyed by exceptional earnings, SK Hynix saw its net cash reserves reach 88 trillion won by the end of June. The chipmaker aims to push that figure past 100 trillion won to shore up business operations and respond flexibly to client orders. Yet the lack of immediate, detailed plans for sharing the windfall through higher dividend payouts frustrated investors.
SK needs to come up with a concrete shareholder return policy to turn around investor sentiment,
said Greg Roh, head of research at Hyundai Motor Securities. While management stated it cannot yet disclose the timing or structure of a revised shareholder return policy, executives confirmed plans to release specific details later this year.
Advanced Production Targets Across South Korean Hubs
Operations are scaling up rapidly across the company’s manufacturing footprint. SK Hynix began mass shipments of its next-generation HBM4 memory during the second quarter, highlighting its power efficiency and cost competitiveness, while completing sample shipments of HBM4E. Production lines in Icheon and Yongin are slated for maximum output, alongside dedicated expansions for NAND flash memory and advanced packaging lines in Cheongju.
For NAND flash production, the company is accelerating its transition to advanced process nodes. Products featuring 321 layers have captured the largest share of total manufacturing output and are targeted to reach approximately 50% of domestic production capacity by the close of the year.
