SK Hynix Flags AI Spending Slowdown as Top Risk in Nasdaq ADR Filing

Big Tech pullbacks and order cancellations cited as key risks

US-China trade tensions also named as a threat

SK Hynix identified a slowdown in artificial intelligence infrastructure spending as its biggest risk factor. The company has delivered record results on surging demand for high-bandwidth memory, or HBM, but earnings could deteriorate sharply if Big Tech slows AI investment or cuts orders.

In a securities filing submitted as it seeks to list American depositary receipts on Nasdaq, SK Hynix said on June 25 that its recent earnings improvement relies heavily on rising demand for high-performance memory products such as HBM and server DRAM, driven by expanding AI infrastructure investment. It also said operating results could weaken significantly if major customers reduce AI-related capital spending or if technological shifts curb memory demand.

The company identified the pace of investment by large technology companies, including hyperscale cloud service providers, as a key variable. Demand for AI infrastructure depends on their heavy capital spending, so cutbacks or delays stemming from macroeconomic conditions or concerns about investment returns could hit demand for SK Hynix products.

The filing also cited the possibility of shifting order flows as a risk factor. SK Hynix said demand could slow sharply if major customers adjust inventories or cancel orders after placing advance purchases. In effect, the jump in demand for high-performance memory during the AI spending boom could be vulnerable to customers' investment decisions and inventory strategies.

The company also pointed to technological change as a variable. Demand for high-performance memory could decline if new technologies reduce memory usage or computing-resource consumption, or if the commercialization of AI technology advances more slowly.

SK Hynix also highlighted the cyclical nature of the memory chip industry. More than 90% of its revenue comes from memory semiconductor products such as DRAM and NAND flash, it said. The industry is prone to recurring periods of global oversupply and price declines when capacity expansions coincide with weaker demand.

The company said the scale of earnings swings was already evident in the last downturn. SK Hynix posted a 2023 operating loss of 7.7303 trillion won ($5.6 billion) and a net loss of 9.1375 trillion won ($6.6 billion). As the market recovered, operating profit rose to 23.4673 trillion won ($17.0 billion) in 2024, 47.2063 trillion won ($34.2 billion) in 2025 and 37.6103 trillion won ($27.2 billion) in the first quarter of 2026. Net profit climbed to 19.7969 trillion won ($14.3 billion) in 2024, 42.9479 trillion won ($31.1 billion) in 2025 and 40.3459 trillion won ($29.2 billion) in the first quarter of 2026.

US-China trade tensions were also listed as a risk factor. SK Hynix said a significant share of its sales is concentrated among customers in the US and China. In 2025, revenue booked through sales subsidiaries in the US and China accounted for 68.8% and 19.7%, respectively. Tariffs and export controls linked to trade tensions, along with subsidy and regulatory measures by both governments, could hurt production and memory demand among key customers, the company said. It also said it had previously halted sales to some customers after the US tightened export controls.

Large capital spending was identified as another risk. SK Hynix said it is expanding production capacity and pursuing new investments to meet growing demand for advanced memory, but schedule delays or cost overruns could weigh on earnings. The company plans capital expenditures of 55.9196 trillion won ($40.5 billion) for the first fab at the Yongin semiconductor cluster, the Cheongju P&T7 plant and an advanced packaging fab in Indiana.

SK Hynix said it views the Nasdaq ADR listing as a springboard for growth. "After the ADR listing, our investor base should broaden and ultimately allow the market to properly assess the company's value," an SK Hynix official said. "We expect to expand our presence in the US, the center of AI innovation, and further strengthen our standing as a global company."

Hong Min-seong, Hankyung.com reporter mshong@hankyung.com