SK Hynix posts record Q3 profit, targets 100 trillion won in shareholder returns

SK Hynix just delivered the biggest quarter in its history: 104.6155 trillion won in third-quarter revenue and 83.3338 trillion won in operating profit, both all-time quarterly records, according to the company's October 28 disclosure. Revenue works out to about $78.86 billion, and it cleared LSEG SmartEstimates of 98.34 trillion won in revenue and 76.72 trillion won in operating profit.

This is what the AI hardware boom looks like when it reaches the income statement. SK Hynix is a key supplier of high-bandwidth memory (HBM) chips to Nvidia, and it has emerged as one of the biggest beneficiaries of the global AI infrastructure buildout. Bloomberg Tech put it this way in its headline: "SK Hynix Profit Jumps Seven-Fold to Soothe Doubts Over AI Rush."

The numbers

Revenue rose 327.9% from a year earlier and 31.9% from the prior quarter. Operating profit rose 632.1% year-on-year and 37.6% quarter-on-quarter. The operating margin hit 80%, up from 76% the quarter before. Eighty percent. On memory chips.

For the first three quarters combined, revenue stands at 236.5105 trillion won and operating profit at 181.4867 trillion won, per Chosun Biz.

Not every line points up. Net profit was 39.7756 trillion won, up 215.7% from a year earlier but down 57.7% from the previous quarter. The figures reported do not say why net profit fell while operating profit and revenue set records. It is a real question, and a glamorous quarter should be able to answer it.

The balance sheet, at least, is dazzling. Cash and cash equivalents grew by 26.5 trillion won from the prior quarter to 114.5 trillion won. Debt fell by 2.8 trillion won to 15.8 trillion won. Net cash ended the quarter at 98.7 trillion won.

The money going back out

Here is where the champagne comes out. SK Hynix says it is pursuing about 100 trillion won in shareholder returns for fiscal 2026: more than 30 trillion won in cash dividends and more than 60 trillion won in buybacks and cancellations, returning over 50% of free cash flow.

The board approved a third-quarter cash dividend of 14.1035 trillion won. That is 20,000 won per share: a 10,000 won regular dividend plus a 10,000 won special dividend tied to returns from the Kioxia investment. The record date is November 30. How large the Kioxia gain actually was is not stated in the reporting.

The board also approved a 20 trillion won share buyback. Of that, 10 trillion won will be canceled for shareholders, and about 10 trillion won will go toward employee compensation. The company does not count the employee portion in its shareholder return total. Separately, a 40 trillion won repurchase announced in August was completed last week, with those shares due to be canceled soon.

Capacity and contracts

The profits come with commitments attached. SK Hynix says shipments of sixth-generation HBM (HBM4) have begun in earnest, and it expects HBM4 to pass fifth-generation HBM (HBM3E) in both shipments and sales starting in the fourth quarter.

To meet demand, the company plans to push production capacity at its M15X plant in Cheongju, North Chungcheong Province, to the maximum by the end of the year. It also plans to convert more than half of its domestic NAND capacity to a 321-layer process during the fourth quarter.

Then there are the long-term supply agreements. SK Hynix says it has signed them with 14 major customers, including global cloud service providers, covering more than 50% of its total production capacity for 2027 and 2028. The contracts typically run a base of five years, with extensions under discussion with some customers. Pricing uses a structure that reflects market conditions within a set range. The customers are not named in the reporting.

The company also forecasts that the memory supply shortage will last until 2030, citing expanding enterprise, sovereign and physical AI adoption, plus long fab construction lead times and technical difficulty. Next year's capital spending, it says, will rise significantly from this year as the first fab at the Yongin Semiconductor Cluster comes online and infrastructure investment grows at home and abroad. The reporting does not specify a 2027 capital-spending budget.

What to watch

• The net profit drop. A 57.7% quarterly decline next to record operating profit needs an explanation.
• The HBM4 crossover. The company expects it in the fourth quarter. That is the next test of its own forecast.
• Capex. "Significantly" is not a number. Watch for the 2027 figure.
• The contracts. Fourteen customers, over half of 2027 and 2028 capacity, five-year terms. Who they are and how the price range works will matter.

The headline asks whether the AI rush deserves its doubters. For one quarter, one company has answered with an 80% margin, a near-100 trillion won payout plan and a shortage forecast that runs to 2030. The margin is reported; the payout target and shortage forecast are SK Hynix's own forward-looking calls. Bold ones, too.