SEOUL, Apr. 25 (Korea Bizwire) — SK hynix Inc. said Thursday its first-quarter net dipped 64.7 percent from a year earlier, due to a slump in the global chipmaking business.
The net profit for the world’s No. 2 memory chip producer came to 1.1 trillion won (US$952 million) in the January-March period, compared with a profit of 3.1 trillion won a year ago, the company said in a regulatory filing.
Its sales dipped 22.3 percent on-year to 6.77 trillion won, while operating profit plummeted 69 percent to 1.37 trillion won, the lowest since the third quarter of 2016.
Shipments of DRAM, used for temporary data storage in PCs and servers, decreased 8 percent from a quarter earlier and the average selling price fell by 27 percent on-quarter, mainly due to a seasonal slowdown and conservative server purchases, SK hynix said.
For NAND flash, memory mainly used for mobile devices, shipments decreased by 6 percent on-quarter and the average selling price fell by 32 percent on-quarter, the company said.
Bolstered by a boom in the global semiconductor market, SK hynix and local bigger rival Samsung Electronics Co. had registered record earnings in recent years, spearheading South Korea’s export growth.
However, prices of DRAM and NAND products have continued to slide due to slow demand and a high level of inventory.
DRAM chip prices fell more than 20 percent on average in the first quarter as major data centers are adjusting their high inventory levels of memory chips, market tracker DRAMeXchange said.
NAND memory was also hurt by slowing smartphone demand as more consumers wait longer to replace their handsets.
SK hynix said the global memory industry has reached a low point but that demand for DRAM products is likely to improve in the second half of this year.
“We believe that demand for memory chips will increase in the long run,” Cha Jin-Seok, the chief financial officer of SK hynix, said in a conference call, adding that the company will focus on cost reduction and technology development.
The company will expand the supply of the high-density 64GB modules as more smartphone makers are poised to adopt high-density DRAM chips later this year.
For NAND flash, SK hynix said it will concentrate on improving profitability by increasing the proportion of 72-layer products. The company has stopped the production of 36-layer and 48-layer versions.
Earlier this year, SK hynix won approval to build a semiconductor cluster, valued at 120 trillion won, in the Seoul metropolitan area.
Shares of SK hynix were trading at 80,600 won on the Seoul bourse as of 10:55 a.m., up 2.68 percent from the previous session. The earnings were announced before the market opened.