Rumors of Changes at SK Hynix's Chongqing Plant

According to sources familiar with the matter, South Korean chipmaker SK Hynix is considering various options for its plant in Chongqing, China, including introducing investors to help accelerate growth.

The sources stated that the company, a major supplier of high-bandwidth memory (HBM) chips to Nvidia, is currently in talks with potential advisors to assist in reviewing its business. Due to the involvement of internal information, the sources requested anonymity. They also indicated that a potential equity sale could value the plant at approximately $3 billion.

According to SK Hynix's official website, the company entered the Chinese market more than 20 years ago when it signed an agreement with Wuxi, a city in eastern China, to build its first large overseas wafer fabrication plant. The Chongqing plant provides a large-scale semiconductor packaging and testing base, supporting the global growth of the company's NAND flash back-end capacity.

The sources mentioned that potential buyers could include Chinese funds and industry companies. They added that SK Hynix might retain a minority stake in the asset.

The sources emphasized that these discussions are preliminary and do not necessarily lead to any transaction.

A representative of SK Hynix declined to comment.

In addition, the company announced on Friday plans to invest 54 trillion South Korean won (approximately $38 billion) to expand its chip manufacturing facilities in South Korea. It will build a new DRAM manufacturing plant in Yongin and a new NAND flash manufacturing plant in Cheongju. The company stated that this move is aimed at addressing the growing demand for memory in the artificial intelligence era.

In July, SK Hynix raised $26.5 billion through a listing in the United States, setting a record for the highest amount raised by a foreign company on U.S. exchanges. This sensational stock offering led a record month for equity capital markets in the Asia-Pacific region.

SK Hynix Revenue Hits Record High

Benefiting from the continued strong demand for AI memory, South Korean memory leader SK Hynix announced its second-quarter financial results (ended June 30, 2026) on Wednesday (July 29). Revenue, operating profit, and net profit all reached quarterly record highs. Despite the impressive performance, the results fell short of high market expectations, causing a significant drop in its stock price on the Seoul stock market and dragging down Asian chip stocks.

According to official data from SK Hynix, second-quarter revenue reached 79.3187 trillion South Korean won (approximately $55 billion), a substantial 257% increase year-over-year; operating profit was 60.5426 trillion South Korean won (approximately $42 billion), up 557% year-over-year, with an operating margin of 76%; net profit was 93.9226 trillion South Korean won (approximately $65 billion), up 1,242% year-over-year. Compared to the previous quarter, revenue and operating profit grew by 51% and 61%, respectively. All three core indicators set new records, and cumulative revenue for the first half of the year exceeded 100 trillion South Korean won for the first time.

However, these financial results still fell below investor expectations. According to market consensus such as LSEG SmartEstimates, second-quarter revenue was originally estimated at around 84 trillion South Korean won ($58 billion), and operating profit at around 64 trillion South Korean won (approximately $44 billion).

The gap between actual figures and expectations, coupled with market concerns about the sustainability of AI infrastructure spending, triggered selling pressure. SK Hynix's stock price plummeted 9.6% in the Seoul market that day (dropping as much as 15% at one point during trading); given the high weighting of SK Hynix and Samsung Electronics in the Korea Composite Stock Price Index (KOSPI), their decline dragged the index down by approximately 6% that day.

Although SK Hynix's market capitalization has retreated significantly from its historical high in June (with some statistics showing a loss of more than half), driven by the AI boom earlier this year, the stock has still accumulated a gain of approximately 138% year-to-date.

Analysts believe that the miss in earnings largely reflects delays in product mix shipments and conservative pricing in long-term agreements (LTAs), rather than weakening demand. Daiwa Capital Market told Bloomberg TV on Wednesday that the fundamentals of the AI-driven supercycle remain unchanged, and investors are looking for clearer shareholder return policies after the stock price correction.

Song Hyun-jong, President of the Corporate Center at SK Hynix, stated during the earnings conference call that demand for AI memory remains strong, with major customers continuing to request increased supply. The company is actively seeking more long-term supply agreements to manage price volatility and ensure stable supply.

Such agreements typically last about five years and include financial safeguards such as deposits. Approximately 10 such agreements have been negotiated so far, and discussions with other major players are ongoing. Major customers include large U.S. tech companies like Nvidia, with whom the partnership has recently been expanded through a multi-year collaboration worth over $500 billion.

Josh Gilbert, Chief Analyst for Asia Pacific at eToro, pointed out that the company's gross margin is as high as approximately 83%, indicating that pricing power still exists, "This situation does not occur in a market with weak demand, but only in a market where customers are competing for supply."

To respond to the expansion of AI infrastructure investment and growing demand, SK Hynix stated it will prioritize investment in growth areas and maintain a robust financial structure. The company expects capital expenditure this year to be at the higher end of the 40 trillion South Korean won (approximately $28 billion) range.

Financial reports show that prices for dynamic random-access memory (DRAM) and flash memory (NAND) both increased quarter-over-quarter. The company maintained top-tier profitability by expanding sales of high-value-added products, including high-bandwidth memory (HBM), DRAM dedicated to AI servers, and enterprise solid-state drives (eSSD).

Technologically, leveraging the advantages of fourth-generation high-bandwidth memory (HBM4) in energy efficiency and cost competitiveness, SK Hynix began mass production and shipments in the second quarter and will expand production in the second half of the year; the upgraded HBM4E adopts an optimal process technology combining technical maturity and mass production stability, with samples delivered in the first half of the year.

In terms of NAND, the company is accelerating the transition to advanced processes, with 321-layer products currently accounting for the largest share of total production, aiming to reach 50% of domestic capacity in South Korea by the end of the year. The company plans to maximize output using existing manufacturing centers in Icheon and Yongin, South Korea, while increasing NAND production and advanced packaging capabilities in Cheongju.

Overall, SK Hynix's second-quarter financial results once again confirmed the strong momentum of the AI memory supercycle, but also highlighted the market's sensitivity to high valuations and the sustainability of future spending. Management remains optimistic about medium- to long-term demand and seeks to solidify its leading position amidst volatility through long-term agreements and capacity expansion.

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