South Korean memory chipmaker SK Hynix on Thursday reported a net profit of 1.92 trillion South Korean won ($1.39 billion) in the first quarter, reversing a loss of 2.58 trillion won logged in the same period a year ago.

This was the first positive income recorded since the third quarter of 2022, LSEG data showed. SK Hynix posted net losses for five consecutive quarters from a slump in the memory chip market.

Revenue in the first quarter stood at 12.43 trillion won, a 144% increase from a year ago. This was the highest revenue logged since second quarter 2022, according to LSEG data.

SK Hynix attributed the strong performance to an “increase in the sales of AI server products backed by its leadership in AI memory technology including high-bandwidth memory” as well as efforts to drive profitability.

SK Hynix is the world’s second-largest memory chipmaker after Samsung Electronics and supplies high-bandwidth memory chips catering to AI chipsets for companies like Nvidia.

The explosive demand for AI chipsets boosted the high-end memory chip market, hugely benefiting players like SK Hynix and Samsung Electronics.

Large language models such as ChatGPT – which caused AI adoption to skyrocket – require a lot of high-performance memory chips as such chips allow these models to remember details from past conversations and user preferences in order to generate humanlike responses.

To meet AI memory demand, the firm said it plans to increase supply of HBM3E – the latest generation of high-bandwidth memory for AI. SK Hynix said it will also introduce 32GB Double Data Rate 5 products this year to strengthen its leadership in the high-capacity server DRAM market.

“We will continue to work towards improving our financial results by providing the industry’s best performing products at a right time and maintaining the profitability-first commitment,” said Chief Financial Officer Kim Woohyun.

The firm projects the overall memory market to grow steadily in the coming months amid rising demand for AI memory, while the conventional DRAM market starts recovering from the second half of 2024.

Pandemic-induced demand for consumer electronics led companies to stockpile memory chips. But macroeconomic uncertainties such as inflation caused consumers to cut back on purchases of such consumer goods, driving down demand and prices for memory chips.

To address the excess inventories, companies like SK Hynix cut production of its memory chips.

SK Hynix shares slid more than 4% on Thursday morning, though in the last one year, they have jumped more than 100%.

The firm has made recent announcements to meet the AI demand.

The firm on Wednesday said it plans to build a new fab in South Korea, with an estimated completion date set for November 2025, to increase production of the next-generation DRAM including HBM to capture the proliferating demand for AI chips.