Memory Chip Market Faces Uncertainty Amid Trade and Geopolitical Risks

SK Hynix, a South Korean company that reported a record quarterly profit that exceeded that of its larger rival Samsung, predicted that sales of its high-end semiconductors used in generative artificial intelligence chipsets would treble this year.

"Uncertainties exist for the memory chip market this year as trade protectionism grows and geopolitical risks deepen, while PC and smartphone companies adjust inventories," SK Hynix Chief Financial Officer Kim Woo-hyun said.

However, as the business warned of greater drops in demand for commodity memory chips used in computers and smartphones due to economic uncertainties and increased competition from Chinese rivals, shares of SK Hynix, a major supplier to AI chip giant Nvidia, fell 3%.

Prior to the outcome, SK Hynix's stock had risen almost 30% so far this year due to optimistic mood fueled by its commercial negotiations with Nvidia. This was in contrast to Samsung, whose stock had increased 2% over the same time frame. Although fourth-quarter results were impressive, SK Hynix's prediction for first-quarter chip shipments was below expectations, which disappointed investors, according to Lee Min-hee, an analyst at BNK Investment & Securities.

"I had forecasted just above 6 trillion won operating profit for Q1, but now I'm expecting around 5.5 trillion won," Lee said.

Shipments of DRAM and NAND flash memory chips would drop by 10% to 20% in the first quarter compared to the previous quarter, according to SK Hynix.