#SK海力士Q3营收104.6万亿韩元 SK hynix earns 90 won more for every 100 won in additional sales: How long can memory chips’ windfall profits last?
SK hynix delivered earnings that are hard to explain through a normal memory cycle. Third-quarter 2026 revenue was 104.62 trillion won, operating profit was 83.33 trillion won, operating margin was 79.7%, and gross margin was about 86%. Revenue rose 25.30 trillion won quarter over quarter, while operating profit increased by 22.79 trillion won: for every additional 100 won in sales, about 90 won became incremental operating profit.
Looking only at third-quarter net profit, SK hynix seems to be going backward: 39.78 trillion won, down 58% quarter over quarter.
Operating profit, however, was 83.33 trillion won, up 38% quarter over quarter.
Net profit was dragged down by 32.6 trillion won in net non-operating losses, including 11.6 trillion won in foreign exchange losses and 22.9 trillion won in losses on investment asset valuations.
In the second quarter, it recorded about 62.2 trillion won in net non-operating gains, including gains from asset sales and valuations.
The highlight is a 90.1% incremental operating margin: revenue rose 25.30 trillion won quarter over quarter, and operating profit increased by 22.79 trillion won, meaning almost every additional won in revenue translated into profit. This is operating leverage from price hikes amid high utilization!
Where does the 90% incremental profit come from? Beyond HBM, conventional memory is also getting more expensive!
SK hynix’s operating margin was still 58% in the fourth quarter of 2025, then rose to 72% in the first quarter of 2026, 76% in the second, and nearly 80% in the third.
Third-quarter DRAM bit shipments rose about 10% quarter over quarter, while average prices climbed nearly 30%; server DDR5 shipments increased by over 40%, and HBM4 entered volume production, raising the share of high-value products.
Price hikes and product mix upgrades combined to rapidly boost DRAM revenue.
NAND is even more interesting: bit shipments edged down, but average prices rose about 25%. This reflected both broad market price hikes and increased shipments of 321-layer TLC enterprise SSDs.
Data centers’ KV Cache, model loading, and massive access demands require not only HBM close to GPUs, but also host memory and high-performance storage. Demand is spilling over across server systems, benefiting both DDR5 and eSSD.
When factories are close to full utilization, depreciation, cleanrooms, and production lines are mostly fixed costs. Price hikes then create strong operating leverage, as reflected in third-quarter revenue growth of 32% quarter over quarter and operating profit growth of 38%.
SK hynix’s gross margin of about 86% is near a historical high, but Micron’s latest quarterly GAAP gross margin was 86.8% and its Non-GAAP margin was 87.0%, so claims that SK hynix is number one globally are inaccurate.
This rally has also produced an industry-wide outcome: HBM, the most profitable product, is driving capital investment and capacity allocation for conventional DRAM.
The supply-demand gap continues to push ordinary DDR5 prices higher, and the relative profit gap between conventional DRAM and HBM is also changing.
Why are SK hynix’s profits accelerating even as its HBM share shrinks?
Counterpoint’s HBM revenue share figures for the second quarter of 2026: SK hynix at 50%, down 8 percentage points quarter over quarter; Samsung at 33%, up 12 points. The gap between the two narrowed from 37 points to 17.
The HBM market expanded 30% quarter over quarter, so a company whose share fell from 58% to 50% still saw absolute revenue rise by about 12%.
HBM4 competition is no longer dominated by a single player; customer qualification, supply stability, yields, and capacity ramp-ups all determine market share.
SK hynix is accelerating M15X, expects HBM4 to surpass HBM3E in both volume and revenue in the fourth quarter, and has already agreed on HBM volumes and prices with major customers for 2027. The next growth phase will have to be shared with more competitors.
Contracts secured through 2028, but competition is preparing for the end of the next price-hike cycle
SK hynix has signed long-term supply agreements (LTAs) with 14 major customers, covering over 50% of planned capacity for 2027 to 2028.
LTAs are not entirely fixed-price deals; prices move with the market within agreed ranges, and prepayments reinforce fulfillment. Considering signed LTAs together with demand under negotiation, DRAM and HBM supply through 2029 is nearly sold out.
But signed contracts and demand under negotiation should be considered separately: although procurement visibility for 2029 is high, prices and profit margins are not locked in.
M15X’s HBM4 capacity is planned to reach its target by the end of 2026, and the first plant in Yongin is scheduled to begin operations in 2027. SK hynix expects capital expenditure to increase significantly in 2027.
Samsung and Micron are also investing in next-generation HBM and advanced DRAM. Customers want to secure future supply, while manufacturers compete for future market share.
Manufacturers will further reshape the conventional DRAM supply mix.
Changxin’s revenue in the first half of 2026 was 150.31 billion yuan, up 873.64% year over year, with a gross margin of 84.84%; its global DRAM share in the second quarter was about 10%, up from 4% a year earlier.
The pressure will first fall on conventional DRAM such as DDR and LPDDR, rather than immediately replicating HBM4’s high-end capacity and qualification. Continued price increases for ordinary DRAM are providing all volume manufacturers with an incentive to expand.
Once new supply comes online, conventional DRAM could see a price turning point first if AI capital expenditure slows or PC and phone makers cannot absorb higher memory prices.
High margins are extremely sensitive to ASPs. When prices stop rising rapidly, profit growth will slow before revenue does.
Net cash of 98.7 trillion won and shareholder returns of about 100 trillion won for 2026—including over 30 trillion won in dividends and over 60 trillion won in buybacks and cancellations—provide financial flexibility. Interest-bearing debt to equity was 5% in the third quarter.
Summary
When will margins decline?
SK hynix’s near-term strength has real support: HBM4 mass production, growth in server DDR5, premiumization of eSSD, tight supply conditions, and long-term contracts with flexible pricing.
A 90.1% incremental operating margin reflects the memory market’s exceptionally strong seller bargaining power.#Gate广场万圣节
SK hynix delivered earnings that are hard to explain through a normal memory cycle. Third-quarter 2026 revenue was 104.62 trillion won, operating profit was 83.33 trillion won, operating margin was 79.7%, and gross margin was about 86%. Revenue rose 25.30 trillion won quarter over quarter, while operating profit increased by 22.79 trillion won: for every additional 100 won in sales, about 90 won became incremental operating profit.
Looking only at third-quarter net profit, SK hynix seems to be going backward: 39.78 trillion won, down 58% quarter over quarter.
Operating profit, however, was 83.33 trillion won, up 38% quarter over quarter.
Net profit was dragged down by 32.6 trillion won in net non-operating losses, including 11.6 trillion won in foreign exchange losses and 22.9 trillion won in losses on investment asset valuations.
In the second quarter, it recorded about 62.2 trillion won in net non-operating gains, including gains from asset sales and valuations.
The highlight is a 90.1% incremental operating margin: revenue rose 25.30 trillion won quarter over quarter, and operating profit increased by 22.79 trillion won, meaning almost every additional won in revenue translated into profit. This is operating leverage from price hikes amid high utilization!
Where does the 90% incremental profit come from? Beyond HBM, conventional memory is also getting more expensive!
SK hynix’s operating margin was still 58% in the fourth quarter of 2025, then rose to 72% in the first quarter of 2026, 76% in the second, and nearly 80% in the third.
Third-quarter DRAM bit shipments rose about 10% quarter over quarter, while average prices climbed nearly 30%; server DDR5 shipments increased by over 40%, and HBM4 entered volume production, raising the share of high-value products.
Price hikes and product mix upgrades combined to rapidly boost DRAM revenue.
NAND is even more interesting: bit shipments edged down, but average prices rose about 25%. This reflected both broad market price hikes and increased shipments of 321-layer TLC enterprise SSDs.
Data centers’ KV Cache, model loading, and massive access demands require not only HBM close to GPUs, but also host memory and high-performance storage. Demand is spilling over across server systems, benefiting both DDR5 and eSSD.
When factories are close to full utilization, depreciation, cleanrooms, and production lines are mostly fixed costs. Price hikes then create strong operating leverage, as reflected in third-quarter revenue growth of 32% quarter over quarter and operating profit growth of 38%.
SK hynix’s gross margin of about 86% is near a historical high, but Micron’s latest quarterly GAAP gross margin was 86.8% and its Non-GAAP margin was 87.0%, so claims that SK hynix is number one globally are inaccurate.
This rally has also produced an industry-wide outcome: HBM, the most profitable product, is driving capital investment and capacity allocation for conventional DRAM.
The supply-demand gap continues to push ordinary DDR5 prices higher, and the relative profit gap between conventional DRAM and HBM is also changing.
Why are SK hynix’s profits accelerating even as its HBM share shrinks?
Counterpoint’s HBM revenue share figures for the second quarter of 2026: SK hynix at 50%, down 8 percentage points quarter over quarter; Samsung at 33%, up 12 points. The gap between the two narrowed from 37 points to 17.
The HBM market expanded 30% quarter over quarter, so a company whose share fell from 58% to 50% still saw absolute revenue rise by about 12%.
HBM4 competition is no longer dominated by a single player; customer qualification, supply stability, yields, and capacity ramp-ups all determine market share.
SK hynix is accelerating M15X, expects HBM4 to surpass HBM3E in both volume and revenue in the fourth quarter, and has already agreed on HBM volumes and prices with major customers for 2027. The next growth phase will have to be shared with more competitors.
Contracts secured through 2028, but competition is preparing for the end of the next price-hike cycle
SK hynix has signed long-term supply agreements (LTAs) with 14 major customers, covering over 50% of planned capacity for 2027 to 2028.
LTAs are not entirely fixed-price deals; prices move with the market within agreed ranges, and prepayments reinforce fulfillment. Considering signed LTAs together with demand under negotiation, DRAM and HBM supply through 2029 is nearly sold out.
But signed contracts and demand under negotiation should be considered separately: although procurement visibility for 2029 is high, prices and profit margins are not locked in.
M15X’s HBM4 capacity is planned to reach its target by the end of 2026, and the first plant in Yongin is scheduled to begin operations in 2027. SK hynix expects capital expenditure to increase significantly in 2027.
Samsung and Micron are also investing in next-generation HBM and advanced DRAM. Customers want to secure future supply, while manufacturers compete for future market share.
Manufacturers will further reshape the conventional DRAM supply mix.
Changxin’s revenue in the first half of 2026 was 150.31 billion yuan, up 873.64% year over year, with a gross margin of 84.84%; its global DRAM share in the second quarter was about 10%, up from 4% a year earlier.
The pressure will first fall on conventional DRAM such as DDR and LPDDR, rather than immediately replicating HBM4’s high-end capacity and qualification. Continued price increases for ordinary DRAM are providing all volume manufacturers with an incentive to expand.
Once new supply comes online, conventional DRAM could see a price turning point first if AI capital expenditure slows or PC and phone makers cannot absorb higher memory prices.
High margins are extremely sensitive to ASPs. When prices stop rising rapidly, profit growth will slow before revenue does.
Net cash of 98.7 trillion won and shareholder returns of about 100 trillion won for 2026—including over 30 trillion won in dividends and over 60 trillion won in buybacks and cancellations—provide financial flexibility. Interest-bearing debt to equity was 5% in the third quarter.
Summary
When will margins decline?
SK hynix’s near-term strength has real support: HBM4 mass production, growth in server DDR5, premiumization of eSSD, tight supply conditions, and long-term contracts with flexible pricing.
A 90.1% incremental operating margin reflects the memory market’s exceptionally strong seller bargaining power.#Gate广场万圣节
