Asia report: SK Hynix leads chip rally after record profits

(Sharecast News) - A record third quarter from South Korean chipmaker SK Hynix sparked a rally across the Asian semiconductor space on Wednesday, with Seoul's benchmark KOSPI soaring nearly 7% as other regional markets posted moderate gains.

The KOSPI finished 6.6% higher, while Japan's Nikkei 225 gained 1.1%. Indices also rose in Shanghai and Hong Kong, up 0.9% and 0.2% respectively, while Singapore finished flat and Mumbai shares fell 0.5%.

South Korea's KOSPI, widely seen as an AI investment play given the heavy weighting of memory chip giants Samsung Electronics and SK Hynix, has been under pressure over recent weeks on the back of concerns about the sustainability of the AI investment boom.

Even the Bank of Korea in last week's monetary policy statement attributed equity weakness to worries about weakening semiconductor profitability.

However, SK Hynix shares surged 11% on Wednesday after reporting a more than sevenfold increase in quarterly operating profit to KRW83.33trn ($62bn), compared with KRW11.38trn a year earlier. Revenue surged 328% to KRW104.62trn, exceeding KRW100trn for the first time, driven by strong demand for AI memory products.

The company also unveiled plans to return approximately KRW100trn to shareholders this year through dividends and share repurchases, including returns linked to gains from its investment in Japanese memory chipmaker Kioxia. Kioxia itself finished Wednesday's session up 14% in Tokyo.

SK Hynix said it had secured long-term supply agreements covering more than half its production capacity for 2027 and 2028, while forecasting that demand for memory chips would continue to exceed supply through 2030.

Technology shares across Asia drew support from renewed interest in AI-related investments, with SoftBank, Advantest, Tokyo Electron and TSMC all putting in a decent performance.