SEOUL (Reuters) -South Korea's SK Hynix posted its highest quarterly profit since 2018 on Thursday as the Nvidia supplier said second-half AI chip demand will rise further, such as for high bandwidth memory (HBM) used in generative AI chipsets.

It was SK Hynix's third consecutive quarterly profit after losses last year.

The world's second-largest memory chipmaker has benefited the most among its peers from AI-driven appetite for high-end chips and enterprise solid-state drives (eSSDs) following its early entry and large investments in the segments.

"The company will further solidify the position as a leader in AI memory products ... based on a stable financial structure," Chief Financial Officer Kim Woohyun said in a statement.

The company reported 5.47 trillion won ($3.96 billion) in operating profit for the April-June quarter versus a loss of 2.9 trillion won a year earlier.

It was the highest profit since the third quarter of 2018, and in line with expectations from LSEG SmartEstimate, weighted toward analysts who are more consistently accurate.

Revenue rose 125% on-year to a record quarterly high of 16.4 trillion won.

Explosive demand for high-end DRAM chips such as HBM, as well as chips used in data centre servers and gadgets that run on-device AI services have lifted chip prices.

SK Hynix leads the HBM market as the main supplier of HBM chips to Nvidia, in competition with U.S. rival Micron and domestic behemoth Samsung Electronics. Nvidia commands some 80% of the AI chip market.

SK Hynix began mass production of fifth-generation HBM chips - called HBM3E - in March, with initial shipments going to Nvidia, sources told Reuters.

HBMs could account for 20% of SK Hynix's profits for DRAM chips by end-2024, Shinhan Securities said, given Nvidia is expected to accelerate its plans for next-generation GPUs to meet soaring demand created by the generative AI boom.

In May, SK Hynix CEO Kwak Noh-Jung said its HBM chips were sold out for this year and almost sold out for 2025.

One of South Korea's top stock picks for the AI boom, SK Hynix shares have risen 47% year-to-date. ($1=1,380.3400 won)