SK hynix Inc. · Q2 2026 call

As a result, second quarter revenue increased by 51% quarter-on-quarter and 257% year-on-year, reaching KRW 79.3 trillion, marking a record high revenue following the previous quarter.

Operating margin also improved by 5 percentage points from that of the previous quarter to record 76%, achieving all-time highs for both operating income and operating margin.

Net non-operating profit reached KRW 62.2 trillion, including foreign exchange-related net gains of KRW 1.1 trillion due to the rising exchange rate and gains from the sale and valuation of investment assets totaling KRW 63.3 trillion.

As of the end of the second quarter, our cash and cash equivalents, including short-term investments, stood at KRW 88 trillion, an increase of KRW 33.6 trillion from the end of the previous quarter. Interest-bearing debt decreased by KRW 0.7 trillion- KRW 18.6 trillion.

To date, we have concluded LTA negotiations with around 10 customers, including our key customers, and are continuing further discussions with our major industry players.

These LTAs represent strategic partnerships that go beyond simple volume supply. They are designed to secure mid to long-term supply stability and facilitate the development of next generation memory aligned with our customers' technology roadmaps.

For the third quarter, DRAM shipments are expected to increase by approximately 10% from that of Q2 as we actively respond to demand with focus on server products. For NAND, we plan bit shipment increase of low single-digit percent quarter-on-quarter.

We began mass production shipments in Q2 and plan full-fledged ramp up of production in the second half of the year. For HBM4E, we supply samples to major customer in the first half of the year.

Due to the schedule acceleration and investment expansion, our 2026 CapEx is expected to reach the high KRW 40 trillion range.

We are planning to prepare for mid to long-term growth opportunities without delay while maintaining CapEx discipline, thereby strengthening both our supply responsiveness and financial soundness.

We view these developments not as a sign of AI investment slowdown, but more as a transition towards higher utilization of the AI infrastructure that has already been built at scale and as well as accelerated monetization efforts.

Given that our capacity expansion will be executed flexibly in alignment with confirmed customer demand, we do not believe our medium to long-term investment plans will lead to oversupply right away.

The LTAs we are discussing with our customers are designed in various forms to be more specific to each customer and their products. While the contract term normally is around five years, specific conditions may vary depending on the customer and product.

In the second quarter, shipments of some high value add products were pushed back into the second half, and changes in the product portfolio appeared to have affected our blended ASP.

Discussion is underway for 2027 HBM supply volume and pricing with our key customers, which is progressing smoothly, supported by solid customer demand.

At present, the conversion limit has been set at 17,790,000 shares, equivalent to the number of shares issued in this ADR offering.

While we cannot provide the specifics regarding the format, size, or timing of any additional shareholder return, we do intend to communicate our plans to the market within the year once they have been finalized.