Memory's profit machine: SK hynix earns 80 cents of operating profit on every won of revenue

SK hynix reported revenue of KRW 104.6155 trillion (~US$78 billion) for the third quarter of 2026, the first quarter above KRW 100 trillion (~US$74.5 billion), with operating profit of KRW 83.3338 trillion (~US$62.1 billion) and net profit of KRW 39.7756 trillion (~US$29.7 billion), according to its earnings release of 28 October 2026 (K-IFRS, consolidated). The company puts its operating margin at 80%; Silicon Analytica calculates 79.7% (83.3338 ÷ 104.6155). In the second quarter, revenue was KRW 79.3187 trillion (~US$59.1 billion) and operating profit KRW 60.5426 trillion (~US$45.1 billion), a margin of 76.3% (Silicon Analytica calculation from the company's figures). The results are preliminary and may change during the independent audit.

SK hynix expects HBM4 to surpass HBM3E in both shipments and revenue in the fourth quarter. It says it has long-term agreements with 14 major customers covering more than 50% of its 2027–2028 production capacity.

Samsung and the price cycle

Samsung Electronics reported third-quarter consolidated revenue of KRW 195.3 trillion (~US$146 billion) and operating profit of KRW 107.4 trillion (~US$80.1 billion) in its full results of 29 October 2026, in line with its preliminary guidance of 8 October (about KRW 195 trillion (~US$145 billion) and KRW 107.4 trillion (~US$80.1 billion)). Its Device Solutions division, which includes memory, posted KRW 147.1 trillion (~US$110 billion) of revenue and KRW 106.5 trillion (~US$79.4 billion) of operating profit.

Prices explain much of this. In a press release of 30 September 2026, market researcher TrendForce (third-party) forecast conventional DRAM contract prices rising about 10–15% quarter on quarter in the fourth quarter and NAND Flash contract prices about 15–20%. Ranges differ between TrendForce reports, so these figures are approximate.

The 2027 question

Silicon Analytica reading (interpretation, not stated by the companies): margins near 80% reflect higher prices as much as higher volumes. The main risk for 2027 is a reversal in prices rather than in demand. SK hynix's long-term agreements include a mechanism that reflects market conditions within an agreed price range, which limits but does not remove that exposure. TrendForce's research also notes divergence within NAND, with strong enterprise SSD demand and weak consumer demand (third-party).