SK Hynix (NASDAQ:SKHY) shares rose nearly 11% in Seoul on Wednesday after the South Korean semiconductor manufacturer reported third-quarter earnings above market expectations and outlined plans to return approximately 100 trillion won ($75.5 billion) to shareholders during 2026.
The company’s operating profit increased 632% year over year to 83.33 trillion won for the three months ended September 30, exceeding the Bloomberg consensus estimate of 77.5 trillion won.
Revenue climbed 328% to a record 104.615 trillion won, while net income increased 216% to 39.78 trillion won.
SK Hynix shares closed at 1,487,000 won in Seoul, while its American depositary receipts advanced 4% in after-hours trading.
Higher Memory Prices and AI Demand Support Earnings Growth
The quarterly results reflected stronger selling prices for memory chips and increased demand for higher-value semiconductor products.
Citi attributed the performance to improving pricing conditions and a greater contribution from advanced memory products.
The results were “driven by rising memory ASPs and increased sales of high-value products despite FX headwinds,” Citi said.
Average selling prices, or ASPs, are an important measure of profitability in the memory semiconductor industry, where earnings can fluctuate significantly with supply and demand conditions.
SK Hynix has benefited from increased investment in artificial intelligence infrastructure, particularly demand for memory used in AI servers and advanced processors.
The company’s latest results indicate that stronger pricing and product sales more than offset adverse foreign exchange movements during the quarter.
SK Hynix Plans 100 Trillion Won in Shareholder Returns
Alongside its earnings announcement, SK Hynix outlined plans to return approximately 100 trillion won to shareholders during 2026.
The programme includes cash dividends of at least 30 trillion won and share repurchases and cancellations totalling at least 60 trillion won.
The repurchase component includes a previously announced 40 trillion won buyback programme, which the company launched in August and completed last week.
SK Hynix also reaffirmed its commitment to distribute at least 50% of free cash flow to shareholders.
The company intends to return most of the gains from its investment in Japanese semiconductor manufacturer Kioxia Holdings through shareholder distributions.
Those gains are reflected in a special third-quarter dividend of 10,000 won per share.
Third-Quarter Dividend and Additional Buyback Announced
SK Hynix declared a third-quarter cash dividend totalling 14 trillion won, equivalent to 20,000 won per share.
The payment includes the 10,000 won special dividend associated with its investment in Kioxia.
The company also announced a further 20 trillion won share repurchase.
Citi expects substantial additional distributions during the final quarter of 2026.
“Under the ~W100tr FY26 shareholder return, we forecast ~W35tr in shareholder returns for 4Q26E, comprising ~W15tr in buyback and ~W20tr in dividend,” Citi said.
The forecast indicates that the bank expects approximately 35 trillion won in fourth-quarter shareholder returns, comprising around 15 trillion won in repurchases and 20 trillion won in dividends.
The distributions form part of SK Hynix’s broader capital allocation plans following the increase in earnings and cash generation associated with stronger memory market conditions.
Memory Chip Shortages Expected to Continue Through 2030
SK Hynix said it expects shortages in the global memory semiconductor market to persist through 2030, reflecting sustained demand from artificial intelligence applications.
The company plans to increase production capacity across both conventional memory products and high-bandwidth memory, or HBM.
Conventional memory is used extensively in AI servers and data processing infrastructure, while HBM is an important component of advanced processors designed for intensive computing workloads.
Expanding production in both categories is intended to address growing demand from customers developing and operating AI systems.
The company’s assessment suggests that the increase in memory requirements associated with artificial intelligence could continue to influence supply conditions over several years.
Long-Term Customer Agreements Cover More Than Half of Future Capacity
SK Hynix disclosed that it has secured long-term agreements with 14 major customers covering more than 50% of its total production capacity for 2027 and 2028.
The agreements provide visibility into future demand as the company prepares to expand its manufacturing operations.
Securing commitments for a substantial proportion of planned output can help manufacturers assess production requirements and investment decisions.
The arrangements also indicate that major customers are seeking longer-term access to memory supplies amid expectations of continued demand growth.
SK Hynix did not provide further details about the individual customers or the financial terms of the agreements in the reported announcement.
SK Hynix Maintains Major Position in Global HBM Market
SK Hynix is one of the world’s largest memory semiconductor manufacturers and a major supplier to Nvidia.
According to Counterpoint Research, the company accounts for approximately 50% to 58% of global high-bandwidth memory supplies.
HBM has become increasingly important in artificial intelligence computing because it enables rapid data transfer between memory and advanced processors.
SK Hynix competes with Samsung Electronics and Micron in the global memory market.
Together, the three companies represented approximately 95% of worldwide DRAM production as of mid-2026.
The concentration of production among these manufacturers has made their capacity decisions and pricing conditions important factors in the semiconductor supply chain.
Semiconductor Shares Advance Following Results
The stronger-than-expected results were accompanied by gains in other major memory semiconductor stocks.
SK Hynix shares increased nearly 11% to close at 1,487,000 won in Seoul.
The company’s American depositary receipts rose 4% in after-hours trading following the announcement.
Micron shares advanced 3%, while Samsung Electronics gained 8%.
The movements followed SK Hynix’s earnings announcement and its outlook for continued memory supply constraints.
The results provided additional information about the demand conditions affecting manufacturers supplying the artificial intelligence industry.
Outlook for SK Hynix
SK Hynix reported third-quarter operating profit of 83.33 trillion won, up 632% year over year and above the 77.5 trillion won consensus forecast.
Revenue reached a record 104.615 trillion won, while net income increased to 39.78 trillion won.
The company also outlined shareholder returns of approximately 100 trillion won for 2026, supported by dividends and share repurchases.
Management expects memory shortages to continue through 2030 and plans to expand production capacity to address demand from AI servers and advanced computing systems.
Long-term agreements with 14 major customers covering more than half of planned capacity for 2027 and 2028 provide additional visibility into future production requirements.
The company’s performance and investment plans will remain closely linked to memory pricing, manufacturing capacity and demand for artificial intelligence infrastructure.