Competing with its arch rival, Samsung, SK Hynix surpassed market expectations for revenue generation in the first quarter. The leading memory chipmaker posted revenue of $12.36 billion, marking a 42% increase for the March quarter 2024. However, despite the upbeat annual growth, the company reported a sequential decline, with revenue falling 11% and operating profit slipping 8% from the record levels seen in the December quarter.

In this volatile situation, investors seem optimistic as the long-term demand outlook for memory chips remains strong, particularly with the growing AI and data center markets.

US Tariffs Created Demand Volatility

With Trump’s Liberation Day tariffs, the global market has created high volatility and uncertainty. In this regard, SK Hynix also reported that macroeconomic uncertainties have created demand volatility that will impact the second quarter earnings of the year. During the Thursday earnings call, an executive from SK Hynix remarked 

“While reciprocal tariff measures between some countries are currently suspended, there are growing concerns that tariff can be applied to semiconductor products.” 

AI-Driven Memory Boom 

After reporting the first quarterly earnings, the company reported that with the launch of new AI-powered consumer products such as PCs and smartphones, the demand for SK Hynix memory chips could rise. The company has also attributed the earnings of the first quarter to AI’s impact on the memory market. An executive from the semiconductor giant stated 

“With development cost decreasing, initiatives for AI development have surged, which has led to a sharp increase in demand,” 

The memory chipmaker anticipates continued investment in AI from Big Tech along with the adoption of open-source AI models and the rise of ‘sovereign AI projects.’ These developments are expected to fuel sustained demand for memory chips as the broader AI ecosystem continues to expand.