According to sources familiar with the matter, South Korea’s SK Hynix is considering various options for its factory in Chongqing, China, including bringing in investors to help accelerate growth.

According to sources familiar with the matter, South Korea's SK Hynix is considering various options for its factory in Chongqing, China, including bringing in investors to help accelerate growth. 

About SK Hynix of South Korea

According to sources familiar with the matter, the company, a major supplier of high-bandwidth memory chips to Nvidia, is currently in talks with potential advisors to assist in reviewing its business. The sources requested anonymity due to the sensitive nature of the information. They also indicated that a potential equity sale could value the plant at approximately $3 billion.

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

Potential buyers may include Chinese funds and industry players, the sources said. They added that SK Hynix may retain a minority stake in the asset.

The sources stated that these discussions are preliminary and do not necessarily lead to any deal.

An SK Hynix representative declined to comment.

Furthermore, the company announced on Friday plans to invest 54 trillion won (approximately $38 billion) to expand its chip manufacturing facilities in South Korea. A new DRAM manufacturing plant will be built in Yongin, and a new NAND flash memory manufacturing plant will be built in Cheongju. The company stated that this move was to address the increasing memory demands of the age of artificial intelligence.

In July, SK Hynix raised $26.5 billion in its US IPO, setting a record for the largest US listing by a foreign company. This blockbuster offering led a record-breaking month for Asia-Pacific companies in the equity capital markets.

SK Hynix's revenue hit a new high

Benefiting from continued strong demand for AI-powered memory, South Korean memory chip leader SK Hynix announced its second-quarter (ending June 29, 2026) financial results on Wednesday (July 29), with revenue, operating profit, and net profit all reaching record highs for a single quarter. Despite the strong performance, it still fell short of market expectations, causing a sharp drop in its Seoul stock price and dragging down Asian chip stocks.

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

However, the earnings report still fell short of investor expectations. According to market consensus estimates such as LSEG SmartEstimates, second-quarter revenue was originally projected at approximately 84 trillion won (US$58 billion) and operating profit at approximately 64 trillion won (US$44 billion).

The discrepancy between the actual figures and 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 (it even plunged as much as 15% intraday); SK Hynix and Samsung Electronics together have a very high weighting in the Korea Composite Stock Price Index (KOSPI), and their share price decline dragged the index down by about 6% that day.

Although SK Hynix's market capitalization has fallen significantly since its all-time high in June (some statistics show it has evaporated by more than half), it still has a year-to-date gain of approximately 138%, benefiting from the AI boom earlier this year.

Analysts believe that the lower-than-expected earnings largely reflect a more conservative pricing strategy for deferred product mix and long-term supply agreements (LTAs), rather than weakening demand. Daiwa Capital Markets told Bloomberg TV on Wednesday that the fundamentals of the AI-driven supercycle remain unchanged, and investors are anticipating clearer shareholder return policies after the stock price correction.

SK Hynix Corporate Center President Song Hyun-jong stated on the earnings 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.

These agreements typically last about five years and include financial safeguards such as margin deposits. Negotiations for about 10 such agreements have been completed, and discussions are ongoing with other major players. Major customers include large US technology companies such as Nvidia, with whom the two companies recently expanded their partnership through a multi-year collaboration worth over $500 billion.

eToro's Chief Analyst for Asia Pacific, Josh Gilbert, pointed out that the company's gross margin of approximately 83% indicates that pricing power remains. "This situation doesn't occur in markets with weak demand; it only occurs in markets where customers are vying for supply."

To address the expanding investment and growing demand in AI infrastructure, SK Hynix stated it will prioritize investments in growth areas and maintain a robust financial structure. The company expects capital expenditures this year to reach the high end of the 40 trillion won (approximately US$28 billion) range.

The financial report shows that both DRAM and NAND flash memory prices saw quarter-on-quarter increases. The company maintained top-tier profitability by expanding sales of high-value-added products, including High Bandwidth Memory (HBM), DRAM for AI servers, and enterprise-grade solid-state drives (eSSDs).

Technologically, leveraging the energy efficiency and cost competitiveness of its fourth-generation High Bandwidth Memory (HBM4), 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 utilizes an optimal process technology that combines technological maturity and mass production stability, and samples were delivered in the first half of the year.

Regarding NAND, the company is accelerating its transition to advanced processes. 321-layer products currently account for the largest share of total production, with the goal of reaching 50% of domestic production capacity in South Korea by the end of the year. The company plans to maximize production capacity at its existing manufacturing centers in Icheon and Yongin, South Korea, while simultaneously increasing NAND production and advanced packaging capabilities in Cheongju.

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

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