SK hynix Shares Jump 10.89% as Record AI Memory Earnings Fuel Major Payout Plan

Record sales meet a sweeping cash return plan

SK hynix reported quarterly revenue above 100 trillion won for the first time on October 28, 2026, as demand for memory used in artificial intelligence pushed operating profit to 83.3338 trillion won. Its shares closed 10.89% higher after the South Korean chipmaker approved 14 trillion won in dividends and a new 20 trillion won share repurchase.

The immediate approvals total 34 trillion won, roughly $25 billion, within a much larger plan for approximately 100 trillion won in shareholder returns during 2026. The annual plan, worth about $75 billion, comes as the company expects memory demand to exceed supply through 2030.

In its third quarter earnings release, SK hynix reported revenue of 104.6155 trillion won and net income of 39.7756 trillion won for July through September. It also disclosed agreements with 14 major customers covering more than half of its production capacity for 2027 and 2028.

The announcement combines three developments that matter to investors and customers: unusually strong earnings, commitments for future chip purchases, and a decision to distribute substantial cash while expanding factories. Chief executive Kwak Noh-Jung also confirmed that the company had stopped reviewing a stock market listing for its American subsidiary Solidigm.

For shareholders, the immediate dividend includes a special payment from gains on an investment in Japanese memory manufacturer Kioxia. For companies building AI systems, the production outlook points to continued competition for memory supplies, even as SK hynix prepares to spend more on manufacturing.

How strong were the earnings?

Revenue increased 327.9% from a year earlier, rising from 24.4489 trillion won to 104.6155 trillion won. Operating profit rose from 11.3834 trillion won to 83.3338 trillion won, an increase of about 632.1% according to the company's earnings table; a 557.2% increase was also published for the same quarter.

SK hynix also exceeded market expectations. Revenue topped the LSEG SmartEstimate of 98.34 trillion won by about 6.4%, while operating profit beat the 76.72 trillion won estimate by approximately 8.6%. Those estimates give greater weight to analysts with stronger records of forecasting accurately.

Operating profit measures earnings from running the business before items such as financing costs and taxes. Dividing the company's 83.3338 trillion won operating profit by its 104.6155 trillion won revenue gives a margin of about 79.7%, rounded to 80% in the official release. In simple terms, nearly 80 won of every 100 won in sales remained as operating profit.

The previous quarter produced revenue of 79.3187 trillion won and operating profit of 60.5426 trillion won. Revenue therefore increased about 32% and operating profit about 38% in just three months. The operating margin rose from approximately 76.3% to 79.7%.

Net income followed a different direction. Although it rose about 216% from a year earlier, it fell 58% from the second quarter's 93.9226 trillion won. Revenue and operating profit set quarterly records, while the company's table shows net income below the preceding quarter. The financial results remain preliminary and subject to changes during independent review.

What shareholders will receive

The board approved a third quarter dividend of 20,000 won per share, totaling 14 trillion won. Half of each share's payment, 10,000 won, reflects improved operating performance. The other 10,000 won is a special dividend tied to realized gains from the Kioxia investment.

SK hynix intends to return most of this year's realized Kioxia gains through special dividends, with distributions associated with the third quarter and the fiscal year end. Realized gains are investment profits that have been crystallized, rather than an increase in the estimated value of an investment still held.

The new 20 trillion won repurchase has two purposes. Shares worth 10 trillion won will be canceled, while approximately 10 trillion won will be used for employee compensation. The employee portion is excluded from the company's shareholder return total.

Canceling repurchased shares reduces the number of shares outstanding, increasing the ownership share represented by each remaining share. Shares retained for employee compensation serve a different purpose because they can later be transferred to workers.

For the full year, SK hynix plans approximately 100 trillion won in returns, including at least 30 trillion won in cash dividends and at least 60 trillion won in repurchases and cancellations. The 60 trillion won figure includes the 40 trillion won repurchase announced in August, which was completed during the week before the earnings announcement. Those shares are due to be canceled shortly.

The company says the program supports its commitment to return at least 50% of free cash flow. Free cash flow is the cash left after operating the business and paying for investments such as factories and equipment. Dividend amounts will reflect operating performance, substantial investment gains can fund special dividends, and repurchases are planned every quarter.

Why AI memory is driving growth

SK hynix attributed its results to higher memory prices and a growing contribution from products used in data centers. It supplies high bandwidth memory, known as HBM, to AI processor maker Nvidia, while also selling conventional memory and storage products.

HBM places memory chips in stacks close to powerful processors, allowing large amounts of data to move quickly. AI processors need that flow of information to perform calculations efficiently. HBM4 is the sixth generation of this technology, and shipments began in earnest during the third quarter.

Server DDR5 shipments increased more than 40% from the previous quarter. DDR5 is a generation of working memory used by servers to hold information while they process tasks. Average selling prices for DRAM, the broader category of working memory, increased by a percentage in the high twenties as conventional prices rose and more expensive HBM4 made up a larger share of sales.

NAND storage also contributed. SK hynix reported expanding sales of enterprise solid state drives using its 321 layer technology. Unlike working memory, these drives retain information when power is switched off. Their role is to store the large collections of data that servers and AI services need to retrieve.

What sold out through 2029 means

SK hynix said virtually all its DRAM and HBM production capacity through 2029 was effectively sold out, counting both signed agreements and purchasing demand under detailed discussion with customers.

The signed portion is more specific: agreements with 14 major customers, including major cloud service providers, cover more than 50% of total production capacity for 2027 and 2028. The contracts typically run for five years, and SK hynix is discussing longer terms with some customers.

Customers and SK hynix agree on a price range, with a mechanism allowing prices to reflect market conditions within that range. This gives the manufacturer a clearer view of future business while retaining some flexibility as prices change. The company plans to keep a similar proportion of capacity under agreements over the longer term, leaving room for changing demand and new products.

Kim Ki-tae, head of HBM sales and marketing at SK hynix, described the pressure on available production:

Customers are requesting more than twice the volume we can supply.

For customers, the practical issue is access to sufficient memory when new AI systems are ready to be assembled. For SK hynix, agreements covering future production provide a stronger basis for decisions about expensive manufacturing equipment and factory expansion.

HBM4 and new factories set the next milestones

SK hynix expects HBM4 to surpass HBM3E in both shipment volume and revenue during the fourth quarter. It plans to bring its M15X facility in Cheongju, South Korea, to maximum capacity by the end of 2026 to support that transition.

The company also plans to expand its latest DRAM manufacturing process and increase sales of DDR5 and LPDDR5 SOCAMM memory for AI servers. In NAND, it aims to have its 321 layer process account for more than half of domestic production capacity during the fourth quarter.

Investment is expected to rise sharply in 2027 as the first phase of its Yongin manufacturing complex enters full operation and infrastructure spending increases in South Korea and overseas. SK hynix gave no exact spending amount, saying it would adjust timing and scale according to customer demand, profitability and investment efficiency.

The company expects shortages to continue through 2030 because advanced manufacturing is becoming more difficult and new facilities take years to build. Its demand outlook includes business and personal AI services, followed over a longer period by autonomous driving and robotics.

The main milestones outlined by the company are:

• August 2026: SK hynix announced a 40 trillion won share repurchase, completed before the October earnings announcement.
• October 28, 2026: The board approved a 14 trillion won dividend and a further 20 trillion won repurchase.
• Fourth quarter of 2026: HBM4 is expected to overtake HBM3E in shipments and revenue.
• End of 2026: M15X is targeted to reach maximum capacity.
• 2027: Investment is expected to increase sharply as Yongin Phase 1 enters full operation.

Why the Solidigm listing was shelved

Solidigm, the American NAND storage subsidiary, had been considered for a potential Nasdaq listing. The proposal drew shareholder opposition and regulatory scrutiny over the effect that a separate subsidiary listing could have on investors in the parent company.

Kwak explained that outside capital was intended to finance Solidigm's production expansion, reduce the investment burden on SK hynix and create more room for shareholder returns. He said market conditions had led the company to stop reviewing the proposal.

Kwak, speaking as SK hynix chief executive, described the decision in the earnings release:

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 decision leaves SK hynix balancing expansion funding with substantial payouts. Its reported cash and cash equivalents reached 114.5 trillion won at the end of September, up 26.5 trillion won from the previous quarter. Borrowings fell 2.8 trillion won to 15.8 trillion won, leaving net cash of 98.7 trillion won.

A sharp rally, with different views on value

SK hynix shares closed 10.89% higher on the earnings day, outperforming the Kospi index's 6.63% gain by 4.26 percentage points. The rally followed a decline of nearly 30% over the preceding three months, when investors had become more concerned about semiconductor valuations and the profitability of AI spending.

Chief financial officer Kim Woo-hyun said customers were examining project profitability and adjusting investment timing, while wider adoption of AI services continued to support spending. SK hynix expects demand to broaden beyond the biggest technology companies to other businesses and national initiatives.

Ryu Young-ho, a senior analyst at NH Investment & Securities, said the earnings had eased market concerns and suggested fourth quarter operating profit could approach 100 trillion won. That figure is an analyst forecast, while the company's stated targets focus on production growth, product transitions and continued investment.

Mehdi Hosseini, a senior equity research analyst at Susquehanna International Group, maintained a neutral rating despite the results. He preferred Micron's more varied memory portfolio and Samsung Electronics' combination of memory and chip manufacturing services for external customers. His assessment illustrates why a strong quarter can coexist with different judgments about which semiconductor investment offers the best balance of potential return and risk.

SK hynix's next operational tests are concrete: increase HBM4 output, reach the M15X capacity target and turn customer demand into sustained earnings while spending more on factories. Shareholders will also be watching the promised cancellations and further quarterly repurchases.

Key Points

• Third quarter revenue reached a record 104.6155 trillion won, with record operating profit of 83.3338 trillion won.
• Shares closed 10.89% higher after the October 28, 2026 announcement.
• The board approved 14 trillion won in dividends and 20 trillion won in repurchases; half of the new repurchase is for employee compensation.
• The 20,000 won dividend per share includes a 10,000 won special payment tied to Kioxia investment gains.
• Planned shareholder returns for 2026 total approximately 100 trillion won, including previously announced measures.
• Signed agreements with 14 customers cover more than half of production capacity for 2027 and 2028.
• SK hynix expects HBM4 to lead shipments and revenue in the fourth quarter and memory shortages to continue through 2030.
• The company discontinued its review of a Solidigm listing and expects factory investment to rise sharply in 2027.