• HBM accounted for just 14% of DRAM volume but drove over half of DRAM operating profit, signaling its growing weight in the business.

• SK hynix outperformed in a seasonally weak quarter, powered by AI-led demand and a tighter, more profitable DRAM mix.

• With tariffs and macro concerns looming, the focus now shifts from year-on-year gains to quarter-on-quarter momentum.

High Bandwidth Memory (HBM) continues to be the cornerstone of SK hynix’s success. In the first quarter of 2025, during which the company exceeded expectations, HBM contributed 14% of DRAM volume but accounted for 44% of revenue and an impressive 54% of DRAM operating profit, underscoring its profitability. We expect the momentum to persist throughout the year, with HBM shipments in Q1 representing just 20% of full-year volumes, leaving significant room for further growth.

DRAM profitability, traditionally tied to business cycles and market-share battles, has shifted gears. While market forces, like the so-called “chicken game”, have played a role, SK hynix’s Q1 earnings highlight a distinct advantage — technological innovation in artificial intelligence (AI). Bolstered by HBM’s strong market demand, the company reported robust earnings during what is usually considered a weak season.

The company’s traditional DRAM division also showed remarkable strength, delivering operating margins well over 40%. This was driven by a refined product mix tailored for AI transition and stringent cost controls. However, potential headwinds loom, including the impact of tariffs and concerns over slowing economic activity. As a result, investors may shift their focus from YoY growth to QoQ changes relative to expectations as they assess the company’s trajectory.

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.