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SK Hynix, a major supplier of high-bandwidth memory (HBM) processors to Nvidia (NASDAQ: NVDA), reported a significant surge in quarterly profit, more than doubling its earnings. The company indicated that demand for AI chips remains strong, with only minimal impact expected from potential U.S. tariffs.

The U.S. government is investigating semiconductor imports, citing concerns that heavy reliance on foreign production poses a national security risk. There are also worries that U.S. export restrictions on chips to China, which have cost Nvidia $5.5 billion, could negatively affect SK Hynix.

Despite these concerns, SK Hynix assured that its HBM sales plans for the year remain unaffected, with contracts with key customers continuing as previously agreed. While the company anticipates some fluctuation in demand for smartphone and PC chips, it remains optimistic about its ability to navigate potential tariff disruptions, mirroring the positive outlook of TSMC, the world’s largest chipmaker, which also benefits from the AI boom.

In the first quarter, SK Hynix posted its second-highest operating profit ever, soaring by 158% to 7.4 trillion won ($5.2 billion), driven by strong AI demand and increased stockpiling of smartphone and PC chips in anticipation of potential tariff hikes. Revenue also surged by 42%, reaching 17.6 trillion won, outperforming analyst expectations.

Some analysts raised concerns that industry-wide stockpiling could result in weaker demand later in the year, but SK Hynix downplayed this, citing the uncertainty surrounding the tariff situation. The company also believes that continued investment by major tech firms in server chips for AI will sustain demand for its products.

SK Hynix also noted that, despite U.S. customers representing 60% of its revenue, it ships most of its products to non-U.S. markets. For instance, Apple manufactures iPhones in China and India, while Nvidia produces AI server products in Mexico and Taiwan.

Furthermore, the company highlighted competition in the AI market from Chinese firm DeepSeek, which is developing lower-cost AI models, likely increasing demand for high-density memory chips.

As the primary supplier of HBM chips to Nvidia, SK Hynix is at the forefront of meeting the surging global demand for these components, especially as competitors like Samsung Electronics have struggled to keep pace. However, SK Hynix shares dipped by 1.2%, underperforming the KOSPI, which fell by 0.5%.

Paraphrasing text from "Investing.com"all rights reserved by the original author