Micron shares slip after SK Hynix profit surges on AI-fueled chip demand

Investing.com - Micron shares slipped in premarket US trading on Thursday after rival SK Hynix (KS:) posted an increase in its fourth-quarter profit underpinned by a sharp spike in demand for its high-end semiconductors used in generative artificial intelligence chipsets.

Operating profit at South Korea's SK Hynix soared by 2,236% to a record-high 8.08 trillion won ($5.64 billion) in the three months to December 31, slightly above Reuters estimates of 8 trillion won. Revenue also jumped by 75% to 19.77 trillion won.

The company is the second-largest maker of memory chips in the world, and has been outperforming peers Micron (NASDAQ:)  and Samsung (KS:) in bringing advanced high-bandwith memory (HBM) chips into production over the past year. 

HBM chips are a key component of AI processors, with SK Hynix in particular serving as a major supplier to AI giant Nvidia (NASDAQ:). The group has subsequently benefited from a ramp-up in AI demand over the past two years. 

SK Hynix said demand for HBM and server memory will continue to rise thanks to rapidly growing AI development across the globe, and that it plans to lift HBM supply to meet this demand. Sales of its AI-optimized chips are seen more than doubling this year. 

Shares in Micron fell by more than 3% prior to the opening bell on Wall Street, while Seoul-listed shares in Samsung dipped by 1.1% on Thursday. 

SK Hynix shares, meanwhile, edged down after the company noted that it would see a steep drop in demand for its commodity memory chips used in smartphone and computers. Prior to the results, the stock had risen by around 30% so far this year, fueled by hopes around its business with Nvidia.

Analysts at Morgan Stanley (NYSE:) flagged a "tougher near-term environment" for SK Hynix's non-HBM memory chips, adding that pricing pressures and intensifying competition in China are denting the overall commodity memory chip market.

In a call with analysts, Chief Financial Officer Kim Woo-hyun warned that "uncertainties exist" around demand for these processors this year as "trade protectionism grows", "geopolitical risks deepen", and "PC and smartphone companies adjust inventories".

(Ambar Warrick contributed reporting.)