Oct 22, 2015
South Korean chip giant SK hynix Inc. said Thursday its third-quarter profit fell 4.3 percent from a year earlier largely due to slowing demand of memory chips for personal computers.
Net profit reached 1.05 trillion won (US$923.5 million) in the July-September period, compared with 1.1 trillion won the previous year, the company said in a regulatory filing.
The figure hovers slightly below the median estimate of 1.07 trillion won in a poll of analysts by Yonhap Infomax, the financial news arm of Yonhap News Agency.
Operating profit came to 1.38 trillion won, up 6.3 pct from a year ago, with sales gaining 14.2 percent on-year to 4.93 trillion won in the cited period.
The weaker bottom line was attributed to mainly falling demand for dynamic random access memory (DRAMs) used in PCs, as global demand has been shifting to mobile devices.
An overall increase in the global supply of DRAM chips has led to a drop in its average selling price by 11 percent on-quarter, weighing down its performance. The DRAM is SK hynix's flagship memory chip lineup, accounting for about 75 percent of its revenue.
SK hynix ramped up its DRAM and NAND flash chip output by 11 percent and 15 percent each in the third quarter, the company said.
The gain in the operating profit came as sales of mobile chips remained strong, with the benefit of a favorable foreign exchange rate giving a boost to the revenue, it added.
The South Korean won weakened about 6 percent against the U.S. dollar in the third quarter, according to the central bank.
The world's No. 2 maker of memory chips said it spent 1.5 trillion won on capital expenditure in the third quarter, with the cumulative spending reaching 5.3 trillion won this year to date.
For all of 2015, it expects to invest 6 trillion won total as disclosed in the previous quarter, Kim Joon-ho, a vice president at SK hynix, said in a conference call.
"The amount for next year may slightly be less (than this year's) given that we completed the construction of the M14 fab this year," he said.
The chipmaker is due to start operations at the new domestic production line for DRAMs called M14 from early next year, on which it has spent 15 trillion won.
The investment is part of SK Group Chairman Chey Tae-won's envisioned 46 trillion-won plan for the semiconductor business, a key unit of the country's No. 3 conglomerate.
Although the short-term outlook for the memory chip market is uncertain due to a seasonal factor, demand will pick up in the following quarters as production of more advanced mobile devices is expected to continue, the company said.
SK hynix said it plans to ramp up its mobile DRAM output to meet such rising demand, including the low power double data rate 4 (LPDDR 4).
It will also shore up efforts to strengthen its 10-nanometer triple-level-cell (TLC) NAND flash lineup and 3-dimensional vertical-NAND chips, it added.
Shares of SK hynix were trading at 32,500 won as of 10:20 a.m. on the Seoul bourse, down 3.4 percent from Wednesday's close.
The earnings result came before the opening of the stock market.
Source: Yonhap News