The United States rushes to import! "AI memory chip king" SK Hynix's profit soared 158% year-on-year in the first quarter.

Source: Wall Street Insights

Benefiting from the global competition in the AI field and customers' rush to import before the imposition of tariffs, SK Hynix's operating profit in March exceeded expectations and increased by 158%. However, the risks under the tariff threat are still approaching.

On Thursday, South Korean memory giant SK Hynix announced that its operating profit in the quarter ending in March increased by 158% to 7.44 trillion won (approximately $5.2 billion), surpassing the expected 6.6 trillion won, and its revenue increased by 42%. This is the company's second-best quarterly performance, following the previous quarter when both its revenue and operating profit reached record highs.

As an important supplier to NVIDIA, SK Hynix has benefited from the strong growth in demand for key AI components such as HBM. SK Hynix said that the sales of 12-layer HBM3E chips are expected to increase in the second quarter, accounting for more than half of the total revenue of HBM3E. This chip is currently the most advanced HBM chip used with Nvidia (GPU) in the market.

However, the brilliant earnings report masks deeper risks. Shawn Kim, an analyst at Morgan Stanley, said in a report to investors this week:

In the face of greater influencing factors, the earnings report season is not that important. The real impact of tariffs on memory is like an iceberg, with most of the dangers hidden beneath the water's surface and still approaching.

SK Hynix also warned that macroeconomic uncertainties will lead to fluctuations in demand in the second half of the year. But the company still predicts that the demand for HBM will double in 2025, citing the fact that it has reached supply agreements with customers one year in advance.

Since the beginning of this year, the share price of SK Hynix has only increased by about 4%. Concerns about a global recession triggered by tariffs, as well as the reassessment of profitability due to DeepSeek's low-cost model, have dampened the momentum of its share price, which had more than doubled in the past two years. Analysts said that if trade tensions cause the global economy to fall into a recession, the terminal demand for all products containing chips faces the risk of a sharp decline.

With the intensification of concerns about tariffs and AI, the bearish bets on SK Hynix reached a record high this month. In April, the short-selling amount of SK Hynix shares has reached 1.5 trillion won (about $1 billion), which is expected to set a monthly record. At the same time, overseas institutional investors have sold a net amount of more than 2.9 trillion won worth of SK Hynix shares this month, also setting a record.

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