Third-quarter 2026 earnings
Operating margin hits 80%
30 trillion won cash dividend, 60 trillion won buyback and cancellation
CEO Kwak Noh-jung joins conference call for first time
'Kioxia investment gains to be shared with shareholders'
14 LTA customers secured; contract extension talks under way
SK hynix has for the first time broken the 100 trillion won ($75.5 billion) and 80 trillion won marks for quarterly sales and operating profit, respectively. Third-quarter operating profit came in at 83 trillion won, surpassing market consensus and extending the chipmaker's streak of record quarterly results to six consecutive quarters since the second quarter of last year. The results translated into an operating margin of nearly 80 percent — an exceptional figure for a manufacturing company.
With memory chip prices continuing to rise and revenue from sixth-generation high-bandwidth memory, HBM4, now flowing in earnest, analysts expect the strong run to continue as a supply shortage in the memory chip market is forecast to persist through 2030.
Alongside the record earnings, SK hynix announced it would return 100 trillion won to shareholders this year, including an additional 60 trillion won to be shared with investors — most of it drawn from gains on its investment in Japanese chipmaker Kioxia — on top of a 30 trillion won cash dividend.
SK hynix said Wednesday its third-quarter operating profit on a consolidated basis came to 83.33 trillion won, a 632.1 percent increase from the same period last year, according to a preliminary disclosure. Sales reached 104.62 trillion won, up 327.9 percent year on year, while net profit rose 215.7 percent to 39.78 trillion won. The operating margin stood at 79.7 percent.
The operating profit figure beat the market consensus of 76.26 trillion won by 9.3 percent. In a single quarter, SK hynix also surpassed its full-year sales for last year of 97.15 trillion won, marking the first time in the company's history that quarterly sales have exceeded 100 trillion won.
SK hynix Chief Executive Kwak Noh-jung said during the third-quarter earnings conference call that trust built with customers through technological competitiveness was translating into long-term contracts, creating conditions for stable profitability. "We will carry our memory competitiveness — including in HBM — forward into next-generation products and become the partner customers turn to first when preparing for the future," Kwak said.
It was the first time Kwak had personally joined a conference call. The last time an SK hynix chief executive appeared on such a call was six years ago, when then-CEO Lee Seok-hee participated to announce the acquisition of Solidigm, at the time Intel's NAND business unit. Kwak also addressed the planned initial public offering of Solidigm and a special dividend related to Kioxia.
SK hynix said both sales and operating profit hit all-time quarterly highs as surging AI adoption drove a sharp increase in memory chip demand. Demand for key products remained strong even as market prices for those products rose.
By product, the ramp-up of HBM4 shipments to Nvidia drove DRAM earnings higher, with the company noting a significant increase in sales of server DDR5 (double data rate) memory. In NAND, growing demand for high-capacity storage in AI data centers boosted sales of 321-layer TLC (triple-level cell) enterprise solid-state drives.
SK hynix also disclosed the status of its long-term supply agreements. The company has signed agreements with 14 major customers, including large global cloud service providers. It is in discussions with some customers about extending the standard five-year contract terms further.
The surge in memory demand has also been building up cash. Cash and cash equivalents at the end of the third quarter stood at 115 trillion won, up 27 trillion won from the end of the previous quarter. Net cash — cash and equivalents minus borrowings — is approaching 100 trillion won.
SK hynix also announced a shareholder return plan totaling 100 trillion won for the current fiscal year. In August, the company said it would allocate more than 50 percent of free cash flow to shareholder returns and disclosed a 40 trillion won share buyback and cancellation program; it has now decided to go further with additional returns.
For the full fiscal year, the company will pay more than 30 trillion won in cash dividends and spend more than 60 trillion won on share buybacks. The 40 trillion won buyback announced in August was completed last week and is scheduled for cancellation.
Of particular interest to investors was a special dividend tied to gains from selling part of its stake in Japan's Kioxia. SK hynix said it would share most of the cash generated from the partial stake sale in the first half of the year with shareholders.
To that end, SK hynix's board resolved Wednesday to pay a third-quarter cash dividend of 14 trillion won and to buy back 20 trillion won worth of its own shares. Of the shares to be repurchased, 10 trillion won worth — designated for shareholder return purposes — will be fully cancelled. The remaining approximately 10 trillion won is earmarked for employee compensation and is not included in the shareholder return plan.
"We will continue to deliver stable results on the back of solid memory demand growth and our technological competitiveness, and consistently share those results with our shareholders," SK hynix said.
jeongwan@heraldcorp.com
