Nvidia-supplier SK Hynix bets on chip ‘super cycle’

Chipmaker Nvidia’s stock market value nears record $5 trillion

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South Korea’s SK Hynix has sold out all its chip production for next year and plans to sharply boost investments, expecting an extended chip “super cycle” spurred by the artificial intelligence (AD) boom, it said on Wednesday after reporting a record quarterly profit.

‘The company, which supplies artificial intelligence chip leader Nvidia, said supply growth for memory chips is likely to be limited just as demand is surging, with customers vying to expand investments in AI data center infrastructure.

SK Hynix shares rose as much as 6% after the record profit, outpacing a 1.5% rise in the benchmark KOSPI.

A growing number of customers are scrambling to lock in supplies in response to a chip shortage, placing orders for next year in advance and pushing for long-term contracts, the company said.

At the same time, a shift in production to high-bandwidth memory (HBM) has strained output of conventional memory, such as DRAM, and “total output will inevitably remain limited,” said Kim Kyu-hyun, SK Hynix’s head of DRAM marketing.

“This structural constraint on DRAM supply is expected to support the current prolonged memory super cycle, as supply growth lags behind accelerating demand,” he said.