SK hynix achieves record-high Q2 profit on strong DRAM, NAND growth

SK hynix, South Korea’s second-largest memory chip provider, achieved the largest-ever second-quarter profit this year, owing to unwavering growth of demand for memory chips.

The firm is forecast to continue benefiting from favorable market conditions in the second half of the year, according to its earnings announcement Thursday.

The Korean memory chip maker posted 10.37 trillion won ($9.25 billion) in sales and 5.57 trillion won in operating profit for the April-June period, jumping 55 percent and 83 percent respectively from a year earlier.

The second-quarter net profit stood at 4.33 trillion won, surging 75 percent from the same quarter last year.

All figures marked all-time highs boosted by favorable market conditions, the company said. 

The bit shipments of DRAM increased 16 percent from the previous quarter because of the robust server and PC DRAM markets, and NAND flash bit shipments expanded 19 percent due to growing SSD demand and a rising trend of NAND density in Chinese mobile phones.

A 4 percent increase in the average selling price of DRAM products on-quarter contributed to the record profit in the second quarter. The average selling price of NAND flash products, on the other hand, fell 9 percent.

For the next six months, market demand for DRAM is expected to show steady growth due to the expansion of investments by US and Chinese businesses into internet data centers. Supply is estimated to be far short of the growth in demand because of limited growth of production due to technological difficulties for nano-process.

“SK hynix will place its focus on expanding leading-edge technologies to mass production to respond to the market demand,” said Lee Myoung-young, executive vice president at SK hynix.

“It will consistently expand the portion of 1Xnm mainly in the sales of server and mobile DRAM, which are expected to have strong demand growth,” he said. “The portion of the 1Xnm will be expanded from around 20 percent as of the second quarter to 33 percent by the end of the year.”

The next generation of 1Xnm, 1Ynm process will be applied for mass production, starting next year.

The company also plans to stretch its cutting-edge 72-Layer 3D NAND and make efforts to smoothly supply high-density mobile solutions and enterprise SSDs.

Meanwhile, the company aims to complete the cleanroom construction of a new fab in Cheongju, North Chungcheong Province, by the end of this September, and hopes the fab will contribute to its production capacity from the beginning of next year.

In addition, the cleanroom space expansion at Wuxi fab in China will be completed by the end of this year as planned.

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