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SK Hynix: What shall we do with all the cash? SK Hynix, overflowing with cash, has a spending problem, but still does not have enough cash to build a US Solidigm fab. Predictably SK Hynix had another gargantuan, humungous quarter with revenues rising 328 percent Y/Y to ₩104 trillion ($78.9 billion) in its third 2026 quarter, surpassing ₩100 trillion for the first time, while net income went up 216 percent to ₩39.8 trillion (c$30 billion). Its operating margin was 80 percent and its made so much money that it now has a net cash position of ₩98.7 trillion ($74 billion), being effectively debt-free. CEO Kwak Noh-Jung explained why the Solidigm subsidiary’s US IPO was abandoned: “The IPO was intended to raise external capital for the expansion of Solidigm’s production facilities, and thereby to lighten our own investment burden and broaden our capacity for shareholder returns,” CEO Kwak said. “However, after carefully considering recent financial market conditions and other factors, we concluded that proceeding at this time would not be the best way to achieve the originally anticipated outcome. We have therefore discontinued our review.” The company is confident about the effect of AI on its products, talking of a virtuous cycle in which AI-driven productivity gains and new revenue generation in areas such as software development, customer service, and search lead to greater AI adoption, which in turn drives increased investment in infrastructure. It reckons that he global AI data center infrastructure market will continue to grow steadily. So the memory market will sustain its growth, led in the short term by enterprise and personal AI and, over the mid-to-long term, by physical AI such as autonomous driving and robotics. As of this quarter, HBM4 is becoming its mainstream product and should overtake HBM3E in volume and revenue next quarter. The company has 14 LTAs (Long-Term buying/supply Agreements) for more than half of its memory capacity for 2027 and 2028. It sees memory demand exceeding supply through to 2030. Server DRAM sales for DDR5 product ramped up significantly in the quarter as did LPDDR5 memory (SOCAMM) for AI servers. Its latest 321-layer NAND saw TLC SSD sales growing, and Hynix is still developing its high-bandwidth flash (HBF technology). The company’s spending decisions are: - Return most of Kioxia share gain to shareholders with ₩100 trillion ($75.4 billion) going their way this year. It can use this one-time gain to keep shareholders sweet without limiting how much of its surging profits it can spend in increasing HBM, DRAM, and NAND production capacity. - Increase DRAM production capacity - increase the portion of its 10nm-class 6th generation (1c) Ramp up M15X fab’s output to maximum capacity by the end of the year to increase HBM4 production, - Raise the proportion of its 321-layer NAND process to more than half of its domestic production capacity in the fourth quarter, and thereby increase the supply of high-performance, high-capacity eSSD. - Production output will rise in 2027 with the Yongin Phase 1 plant entering full-scale operation. Overall, with domestic and overseas infrastructure investment gaining momentum, production investment is expected to increase significantly. CEO Kwak said: “The customer trust built through our technological competitiveness is leading to long-term contracts, and our business structure is transforming into one with earnings stability and mid-to-long term demand visibility. We will carry our HBM competitiveness over to next-generation products, and we will also increase the rewards we share with our shareholders as our business outcome and investment result grow.” Paying for a US fab for Solidigm is still a problem to be solved. SK Hynix is for sure awash with cash but it could still do with another $30 billion or so.
document fetched 2026-10-29 03:01 · canonical https://blocksandfiles.com/flash/2026/10/28/sk-hynix-what-shall-we-do-with-all-the-cash/5306038