[Newsmaker] SK hynix steps closer to record-high annual profit

With another record-breaking performance in the third quarter, South Korea’s second largest chipmaker SK hynix is stepping closer to witnessing the largest-ever annual profit of around 10 trillion won ($8.9 billion) this year.

According to earnings announced Thursday, the chipmaking unit of SK Group, posted 8.1 trillion won in sales and 3.74 trillion won in operating profit during the July to September period.

The third quarter revenue and operating profit climbed 21 percent and 23 percent from the previous quarter, respectively.

The financial results marked another new quarterly high, according to the company, owing to favorable market conditions including undersupply of DRAM and higher DRAM prices.

The company’s DRAM shipments grew 17 percent quarter-on-quarter, while the average selling price rose 6 percent, due to strong demand from mobile and server products.

NAND flash shipments expanded 16 percent, centering on high-density NAND products, in line with launches of new smartphones.

SK hynix forecasts the undersupply of DRAM will continue into the fourth quarter, considering increased difficulties in expanding production due to technological limits of upgrading processes and space shortage in clean rooms to inject more wafers. 
 

For DRAM, the company has adopted 21-nanometer and 25-nm processes, while using 14-nm and 16-nm for NAND.

“Productivity growth for DRAM is expected to slow due to the increasing technological difficulties and production time,” said Lee Seok-hee, president and head of corporate support at SK hynix during a conference call.

Given the production conditions, the company forecasts a single-digit growth in DRAM shipments in the next three months.

NAND prices are stabilized, compared to DRAM prices, while growth in demand for high-density chips is also on the wane, the company said.

“The NAND market is relatively stabilized, but we do expect an increase in demand for mobile NAND in the fourth quarter, especially from Chinese customers,” Lee said.

The 3-D NAND market seems to be growing slower than initially expected as the SK hynix official said, “Growth in 3-D NAND demand is limited, while undersupply persists in the market.”

In the fourth quarter, SK hynix seems to maintain its focus on the DRAM market, particularly on server and mobile products, which contributed to the record-high profit in the third quarter.

The company will mass produce 10-nm DRAM in the fourth quarter as planned, and High Bandwidth Memory 2 products will start to be supplied.

SK hynix will also enter the enterprise solid state drive market next year by starting to mass produce 512-gigabit 72-layer 3-D NAND within the year, the chipmaker said. 

By Song Su-hyun (song@heraldcorp.com)