Samsung, SK Hynix Forecast Record-Breaking Q2 Driven by AI Memory Demand

Samsung Electronics and SK Hynix are expected to achieve their highest-ever earnings in the second quarter of this year, buoyed by the increasing demand for AI-related memory semiconductors. Analysts suggest the semiconductor market has moved beyond recovery into a boom phase, with overall demand growing for high-bandwidth memory (HBM), essential for AI learning, as well as standard DRAM and NAND flash memory. The recovery is broadening as AI demand extends beyond a select few high-performance products to encompass general-purpose products like server memory and enterprise SSDs.

Samsung Electronics is benefiting from the rise in general memory prices, leveraging its large-scale production capacity. While SK Hynix holds a dominant position in the HBM market, Samsung Electronics' performance improvement is also widening as prices for DRAM and NAND begin to rebound. SK Hynix continues its performance improvement trend through a high-profit product mix centered on HBM. Profitability is expected to keep improving amid robust demand from major AI chip customers like Nvidia and ongoing HBM supply shortages.

The combined effects of production cuts initiated last year and the surge in demand for AI server memory are driving continued price increases for standard DRAM and NAND. The industry views the second-quarter results as a key indicator for the sustainability of the memory supercycle. Despite recent 'AI bubble' theories in the stock market, analyses suggest that the actual profit-generating capacity of semiconductor companies is strengthening.

However, whether this trend will persist in the second half of the year depends on the pace of AI server investments and the timing of memory supply expansion. A potential slowdown in the pace of profitability improvement could occur if HBM capacity expansion begins to significantly impact the market and the price increase for general-purpose memory moderates. Despite debates over AI investment overheating, the memory market currently remains in a demand-outstripping-supply phase. With price increases extending from HBM to general DRAM and NAND, a seller's market is expected to continue for the time being.