SK Hynix's Cash Pile Hits 35 Trillion Won as AI Memory Demand Outstrips Supply for Three Years

SK Hynix posts record 37.6 trillion won operating profit, plans $13B mega-fab, and sends HBM4 samples to Nvidia amid structural memory undersupply.

The numbers coming out of SK Hynix are staggering by any measure. South Korea's memory chip giant posted an operating profit of roughly 37.6 trillion won in the first quarter of 2026, with margins swelling to 72 percent. Revenue hit 52.58 trillion won — nearly triple the 17.64 trillion won recorded a year earlier — while operating income quintupled from the same period in 2025.

Those figures have transformed the company into one of the most cash-rich players in the semiconductor industry. Net liquidity — cash minus debt — now stands at 35 trillion won, giving management ample ammunition to reward shareholders and fund expansion simultaneously.

Shareholder Returns Take Center Stage

The board plans to distribute half of free cash flow this year and next. For 2026, the company forecasts free cash flow approaching 150 trillion won. Alongside dividends, the agenda includes share buybacks and a potential ADR listing in the United States.

This marks a significant shift in capital allocation strategy. The management has also signaled it will review additional shareholder remuneration measures — including possible dividend adjustments — later this year.

HBM4 Samples Already in Nvidia's Hands

The earnings bonanza stems from a structural undersupply in the memory market that shows no signs of easing. Ki Tae Kim, head of HBM sales, told analysts on the earnings call that customer requests for HBM deliveries over the next three years already far exceed current production capacity.

SK Hynix has sent final samples of its sixth-generation HBM4 memory to Nvidia for certification on the Vera Rubin GPU platform. Mass production is slated for the second half of 2026. The chip uses a logic die manufactured by TSMC, deepening the alliance between the two companies.

The broader memory shortage is expected to persist into the second half of 2026, with analysts projecting AI-driven computing demand will continue expanding for another two to three years. That backdrop gives SK Hynix considerable pricing power for the remainder of the year.

$13 Billion Mega-Fab Breaks Ground

To address the supply bottleneck, construction began on April 22 for a new advanced packaging facility in Cheongju, dubbed P&T7. The investment totals 12.85 billion US dollars — roughly 19 trillion won — with completion targeted for late 2027.

The company expects DRAM and NAND shipments to increase in the second quarter as the new capacity comes online incrementally. HBM4 chips remain scarce, with the next generation likely to keep production lines running at full tilt.

Stock Hits Fresh High as Leveraged ETFs Loom

The market has rewarded these developments handsomely. Shares climbed 5.48 percent on Monday to 1,289,000 won, marking a new 52-week high. The stock has roughly doubled since the start of 2026, gaining about 90 percent year-to-date.

A structural catalyst may add further momentum. Following a revision to South Korea's capital market law approved by the cabinet on April 21, the country's first domestic 2x leveraged single-stock ETFs are expected to begin trading on May 22. SK Hynix and Samsung Electronics are slated as the underlying assets.

The tax treatment is notably favorable: domestic ETFs face a flat 15.4 percent levy on trading gains, more attractive than the previous route through foreign markets. The introduction of these leveraged products is likely to increase intraday volatility in SK Hynix shares.