The outfit noted that robust artificial intelligence demand helped it narrow its second-quarter operating loss from the prior quarter's record.

SK Hynix said that memory chip demand from corporate buyers stocking AI data centres and gaming personal computers is expected to increase in the second half of the year.

Microsoft, a key client for such chips, laid out an aggressive spending plan throughout fiscal 2024 to meet the demand for its new AI services after reporting a sharp rise in costs from building new data centres.

SK Hynix's head of DRAM marketing Myoungsoo Park said that there was a long-range visibility on AI-driven demand from our clients into next year.

For those who came in late, memory chip makers cut production in the first half of this year as prices continued to fall due to slumping demand from buyers amid economic headwinds, causing steep writedowns to the value of unsold stockpiles.

Market conditions remain mixed depending on the type of chips. SK Hynix said it would cut production of its NAND Flash chips used for data storage by a further 5- 10 per cent because of high inventories and low profitability amid a fall in the average sales price.

SK Hynix reported a $2.28 billion operating loss in the June quarter on weak memory chip pricing and demand. Revenue fell 47 per cent year-on-year in the June quarter.

But a boom in AI helped it boost sales of high-end DRAM chips in the second quarter and narrow losses from the record loss reported in the first quarter.

SK Hynix said demand for AI server memory had more than doubled in the second quarter compared to the first quarter. Its DRAM chips, which hold information from applications while the system is in use, sold for a higher price in the second quarter versus the first, on average.

SK Hynix's DRAM business is expected to swing to a profit in the fourth quarter thanks to strong sales of premium products such as HBM and high-density DDR5 chips. But NAND Flash demand from Chinese mobile firms may continue to stagnate until year-end leaving the chip maker's return to full profit uncertain.