🔰 [Beginner's Guide] SK Hynix's 'Miracle Earnings' and the Truth About Kioxia: A Financial Detective's Simple Breakdown of the 13x Profit Surge
Hello, I'm Kato-chan, your financial detective.
"I heard SK Hynix's net profit increased 13-fold compared to last year!"
"Will this also be a tailwind (price boost) for Kioxia's stock?"
Many investors are likely curious after seeing such topics in the news or on social media.
Let me give you the conclusion right away. It is extremely dangerous to make investment decisions based solely on superficial news headlines.
In this article, I will break down the seemingly complex financial statements to explain 'why SK Hynix is the sole winner in the AI era,' 'why net profit is higher than revenue in the financial statements,' and 'the harsh truth surrounding Kioxia,' in a way that is easy for investment beginners to understand while still digging deep!
💡 1. What is so amazing about it in the first place? The heart of the AI era: 'HBM'
The biggest reason SK Hynix is earning explosively is that it holds a majority global market share in ultra-high-performance semiconductor memory called 'HBM' (High Bandwidth Memory).
If conventional memory (DRAM or NAND) is a 'regular road,' HBM is a 'super-high-speed highway made of dozens of stacked multi-level overpasses.' This HBM is absolutely essential for AI (such as NVIDIA's GPUs) to process vast amounts of data in an instant.
Conventional memory (NAND, etc.): Used in smartphones and PCs. Currently, there is an oversupply and fierce price competition.
Next-generation memory (HBM): Used in AI servers. There are almost no companies in the world that can make it, and it is in a super high-demand state where it can be sold at 'any price the seller sets'.
While Kioxia focuses on conventional 'NAND memory,' SK Hynix specialized in 'HBM,' which allows it to hold price negotiation power, giving it an otherworldly earning power with a 76% profit margin despite being a manufacturing company.
🔍 2. The mechanism behind the 13x profit surge: The eerie phenomenon of 'net profit being larger than revenue'
The most talked-about figure in this earnings report (Q2 2026) is this one.
Revenue: 79.3 trillion won
Net Profit: 93.9 trillion won (up +1,242% / approx. 13x year-on-year)
You might wonder, 'How can the net profit (93.9 trillion won) be larger than the revenue earned (79.3 trillion won)?'
Actually, there are 'two engines' at work here.
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Explosive Core Business Profits (Engine 1):
HBM is selling like crazy, generating 60.5 trillion won in operating profit from the core business alone.
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Explosion of Investment Assets (Engine 2):
Apart from the core business, the value of semiconductor-related investment assets they have held for a long time has surged, adding about 60.9 trillion won as 'other non-operating income'.
In other words, half of the flashy headline '13x Net Profit!' is due to a doping effect where one-time unrealized gains suddenly erupted on top of core business earnings. Knowing what's behind this is the first step toward professional financial analysis.
🏰 3. The Overwhelming 'Cash Fortress': Why Can't Competitors Catch Up?
'Where did the money they made go?'
The answer is simple.It was all piled up in the safe as 'cash' on hand.
Cash on Hand: 54.3 trillion won → 87.96 trillion won (a massive increase of 33.6 trillion won in just 3 months)
Debt: Approximately 18.6 trillion won (they are actually paying it down and reducing it)
The semiconductor business is a 'bloody capital investment battle' that constantly requires massive debt to purchase new factories and machinery.
However, SK Hynix has built a financial fortress that is effectively debt-free, with '87.96 trillion won in cash against 18.6 trillion won in debt.'
Furthermore, they are aggressively pouring 40 to 50 trillion won annually into capital investment using only their own cash, without taking on any debt. It has reached a point where it is physically impossible for cash-strapped competitors to keep up with this pace of investment.
🚨 4. The Decisive Difference from Kioxia: Why It's Not a 'Sympathetic Rise'
Newspapers and other media sometimes report that 'SK Hynix's listing and strong earnings will support the stock price of Japan's Kioxia.'
However, when you compare the primary information (raw corporate data), a brutal difference becomes apparent.
SK Hynix: Dominates the market with HBM, secures contracts years in advance by receiving deposits from customers (Big Tech). Building next-generation factories with 88 trillion won in cash.
Kioxia: Dependent on conventional NAND, where competition is fierce. Laps behind in next-generation HBM. Major funds (Bain, etc.), which are the largest shareholders, have already finished selling off their stakes at high prices.
With major funds having already finished their sell-off, jumping in thinking 'Kioxia is a buy because its industry peers are doing well' is like being forced to participate in a game of 'Old Maid' after the big players have already left.
🕵️♂️ A Message from the Detective
The most important thing in investing is not to buy or sell based on 'headlines' or the 'vibe' from TV or newspapers.
Even financial statements that look difficult at first glance become clear once you understand the mechanics, revealing whether a company is truly strong or just putting on a show.
The overwhelming winning pattern of SK Hynix, which dominates the HBM market
How to read financial statements to spot one-time profits
Just by knowing these two things, your investment perspective will broaden significantly.
If you are interested in more detailed account figures or precise data hacking of B/S and C/F, please be sure to dig deeper in the main article!
*Click here for even deeper financial hacking and primary information data! 👇
A final announcement!
One last exciting announcement for all my readers. I have officially started an English version on Substack for investors in the English-speaking world!
I intend to compete on the same playing field as overseas professionals and pass on the more advanced primary information and analysis I gain there to the readers of this note. Please look forward to my future endeavors as I take on the world!
Everything is for the readers!!!
(Disclaimer: This text is for informational purposes only and does not constitute solicitation for specific stocks, investment advice, or a guarantee of the completeness of financial analysis. Investing involves risks. Please always make final investment decisions at your own responsibility.)
#StockInvestingForBeginners #Semiconductors #SKHynix #Kioxia #HowToReadFinancialStatements #FinancialAnalysis
