SK Hynix has successfully concluded negotiations with NVIDIA for next year's HBM4 supply, securing record-breaking performance in advance.

According to recent reports, the South Korean semiconductor giant SK Hynix has gained the upper hand in supply negotiations with NVIDIA for the sixth-generation high-bandwidth memory (HBM4), raising prices by over 50% to approximately $560 per unit. This move solidifies its dominance in the high-end memory chip market.

The HBM4 will be integrated into NVIDIA's next-generation AI chip, Rubin, set for release in the second half of next year. SK Hynix delivered the world's first 12-layer HBM4 sample to NVIDIA in March this year and began supplying initial batches in June. With the AI infrastructure investment boom driving up demand for memory chips, SK Hynix's pricing power has strengthened.

Analysts predict that, based on HBM4's high profit margins and soaring prices for general-purpose DRAM, SK Hynix's operating profit next year could exceed 70 trillion won, setting a new record. The company has already sold out its production capacity for next year.

**Technological Upgrades Drive Costs, HBM4 Prices Rise Over 50%, NVIDIA Concedes**

The significant price hike for HBM4 is supported by technological advancements.

The product features 2,048 data transmission channels (I/O), double that of its predecessor, HBM3E (1,024 channels). Additionally, the base chip connecting the GPU and HBM now includes logic processes for computational efficiency and energy management.

Given the increased costs from these technological improvements, SK Hynix has outsourced the production of base chips for HBM4 to TSMC. The company initially proposed a price of over $500 per unit for HBM4, marking a more than 50% increase from the previous generation.

NVIDIA initially resisted the steep price hike, considering Samsung Electronics and Micron's plans for large-scale HBM4 supply, leading to a standoff. However, the final supply price was settled at around $560 per unit, as proposed by SK Hynix. An SK Hynix executive stated that the price increase reflects the product's technological progress and input costs.

**High Profit Margins to Continue**

Following the price negotiations, SK Hynix recently informed institutional investors that high operating profit margins will persist next year. Reports indicate the company confirmed that "prices and volumes for products meeting NVIDIA's specifications have been finalized, maintaining current profitability."

This suggests that even if Samsung Electronics and Micron enter the HBM4 market, SK Hynix's performance will remain unaffected.

Industry estimates place SK Hynix's HBM4 profit margin at around 60%. Market projections indicate the company's HBM sales next year could reach 40 trillion to 42 trillion won. If profit margins remain consistent with this year, SK Hynix's HBM business alone could generate approximately 25 trillion won in operating profit.

With the shift from HBM3E to HBM4 as the primary supply product in the second half of next year, the company's overall HBM performance is expected to grow by 40% to 50% compared to this year (sales of around 30 trillion won, operating profit of 17 trillion won).

**General-Purpose DRAM Prices Soar, Boosting Record Performance**

SK Hynix's performance outlook is not solely dependent on HBM4. Driven by the global AI infrastructure investment boom, prices for general-purpose DRAM, such as GDDR and low-power DDR, are also surging.

According to DRAMeXchange data, the fixed transaction price for DDR4 exceeded $7 in September, hitting a 6-year and 10-month high. This is due to major memory chip manufacturers focusing on expanding HBM production lines, leading to supply bottlenecks for general-purpose DRAM.

Analysts suggest that, with rising DRAM prices, SK Hynix's operating profit margin for general-purpose DRAM next year could approach 50% to 60%. An industry insider noted, "As the inference AI market rapidly expands, memory chip supply cannot keep up with demand in the short term," adding that "SK Hynix has already sold out next year's production capacity, ensuring high profit margins."

Combining HBM4's high profitability with rising general-purpose DRAM prices, market forecasts predict SK Hynix's operating profit next year could surpass 70 trillion won. This expectation is based on the company's secured profitability for HBM4.