SK hynix locks in over half of 2027-28 memory output and drops its Solidigm IPO plan

SK hynix, the South Korean memory-chip maker, said it has signed long-term supply agreements covering more than half of its 2027 and 2028 production capacity and dropped its review of a Solidigm IPO, as it reported record third-quarter results on October 28.

What happened

SK hynix reported third-quarter revenue of 104.6155 trillion won and operating profit of 83.3338 trillion won, an operating margin of 80%, according to its earnings release. It was the first quarter in which sales passed 100 trillion won. Revenue rose 32% and operating profit 38% from the second quarter, and revenue was up 328% from the third quarter of 2025, when it was 24.4489 trillion won, the company said. The figures are under K-IFRS and preliminary, and the company said its auditors have not finished their review.

Net income was 39.7756 trillion won, down 58% from 93.9226 trillion won in the second quarter and up 216% from a year earlier. The release does not explain the quarterly decline.

The company said server DDR5 memory drove DRAM sales and that shipments of HBM4 high-bandwidth memory "began in earnest." It expects HBM4 to pass the previous generation, HBM3E, in both shipments and revenue in the fourth quarter.

Long-term contracts and the Solidigm decision

SK hynix said it has signed long-term agreements, typically with five-year terms, with 14 major customers, including large cloud providers. The volume secured so far corresponds to more than 50% of total production capacity for 2027 and 2028. The company said the contracts include a mechanism that reflects market conditions within a price range agreed with each customer.

Chief Executive Kwak Noh-Jung said during the earnings presentation that the company had ended its review of an IPO of Solidigm. "The IPO was intended to raise external capital for the expansion of Solidigm's production facilities," he 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."

Shareholder returns

The board approved a third-quarter cash dividend of 14 trillion won, or 20,000 won per share, and a share repurchase of 20 trillion won. Half of that repurchase, 10 trillion won, will be cancelled; the other half will be used for employee compensation and does not count toward the shareholder-return total, the company said.

Half of the per-share dividend, 10,000 won, is a special dividend that passes on gains from SK hynix's investment in Kioxia. For fiscal 2026 the company said it plans returns of about 100 trillion won, made up of cash dividends of at least 30 trillion won and buybacks and cancellations of at least 60 trillion won, including a 40 trillion won repurchase announced in August that it said was completed last week.

The balance sheet and the outlook

Cash and cash equivalents stood at 114.5 trillion won at the end of September, up 26.5 trillion won from the end of June, while borrowings fell 2.8 trillion won to 15.8 trillion won, leaving net cash of 98.7 trillion won, the company said.

SK hynix said it expects demand for memory to exceed supply through 2030, citing the technical difficulty of leading-edge processes and the long lead time for new factories. It said investment will rise significantly next year as the first phase of its Yongin site enters full operation, while the scale and timing of spending will be adjusted to customer demand, product competitiveness and profitability.

What to watch

The company said it will ramp its M15X fab to maximum capacity by the end of the year to raise HBM4 output, and raise the share of 321-layer NAND to more than half of its domestic NAND capacity in the fourth quarter. The release gives no date for the next results. Its forward-looking statements are the company's plans, not forecasts by FinanceInTime.