SK Hynix announced that it has secured medium- to long-term visibility for memory semiconductor (hereinafter "memory") demand through five-year long-term supply contracts (LTA) with customers. The company also emphasized that it has strengthened contract stability by establishing mechanisms such as purchase commitments for long-term volumes and deposits to enhance contract performance and demand visibility. Regarding concerns about a "memory peak-out," SK Hynix dismissed them, stating, "AI infrastructure investment by CSPs (cloud service providers) will continue robustly beyond next year, leading to expanded demand across the entire memory sector."
In this regard, Park Jun-deok, DRAM marketing manager at SK Hynix, stated during the second-quarter earnings announcement conference call on the morning of the 29th: "While the standard LTA contract period is typically five years, specific conditions may vary depending on the customer and product." He further emphasized, "The contracts include mechanisms such as purchase commitments for medium- to long-term volumes and deposits to enhance contract performance and demand visibility." On this day, SK Hynix also announced that it had concluded LTA negotiations with over 10 customers, including key clients.
SK Hynix clearly indicated that LTAs are being used to enhance medium- to long-term business stability. Manager Park stated, "Our focus is on reducing uncertainty caused by short-term market fluctuations and securing stable medium- to long-term operations for both our company and customers." He added, "We are also negotiating with customers on an LTA pricing structure that can better respond to price volatility rather than adopting a single fixed approach."
Regarding concerns about oversupply due to production capacity expansion plans, SK Hynix drew a clear line by citing the demand visibility secured through LTAs. Song Hyun-jong, SK Hynix Corporate Strategy Officer, stated, "The current capacity (CAPA) expansion initiatives at SK Hynix are based on the visibility of market demand secured through partnerships with customers and LTAs." He further asserted, "Since capacity expansion will be implemented flexibly based on confirmed demand, the possibility that investment expansion plans will immediately lead to oversupply is limited." Addressing concerns about a "memory peak-out" raised by some big tech companies' consideration of AI data center leasing businesses and the emergence of high-efficiency AI models, Song diagnosed these as part of the process of increasing AI infrastructure utilization and fully commercializing profits.
Manager Park explained, "AI investment is directly linked to core competitiveness for major CSPs, making it highly likely that such investments will remain robust." He added, "Even with recent high-efficiency AI models showing explosive user demand, these developments are driving the expansion of AI services and increasing overall usage." He further noted, "This assessment is also supported by medium- to long-term demand discussions we are currently having with major customers. With AI infrastructure investment expected to remain robust next year, demand across the entire memory sector—including HBM (high-bandwidth memory), server DRAM, and high-performance/high-capacity NAND flash—will expand accordingly."
Regarding HBM4 (6th generation), which will begin full-scale production in the second half of this year, Kim Ki-tae, HBM Sales & Marketing Manager at SK Hynix, stated: "We have begun supplying Yangsan to major customers starting from the second quarter. The yield and quality of Yangsan are approaching those of HBM3E (5th generation) products." He added, "For the next-generation product HBM4E (7th generation), we have completed sample supply to customers and are proceeding smoothly according to the planned development schedule, with full-scale Yangsan production targeted for 2027."
Song Hyun-jong further stated regarding additional production infrastructure investments: "Apart from previously announced investment plans, no specific decisions have been made on new infrastructure investments." He added, "The basic direction is to comprehensively consider factors such as electricity, water resources, workforce, supply chains, semiconductor ecosystems, and customer accessibility when determining optimal locations for future production bases, rather than distinguishing between domestic and international sites."
Meanwhile, SK Hynix reported consolidated revenue of 79 trillion 318.7 billion won and operating profit of 60 trillion 542.6 billion won for the second quarter of 2026 on a consolidated basis. Revenue increased by 257% and operating profit surged by 557% compared to the same period last year. Both revenue and operating profit represent record-high performance levels.
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