SEOUL, July 27 (Korea Bizwire) — SK hynix Inc., South Korea’s second-largest chipmaker, on Tuesday delivered robust second-quarter earnings on the back of strong memory demand in the market.
SK hynix reported that its second-quarter net income stood at 1.98 trillion won (US$1.7 billion), up 56.5 percent from a year earlier.
Operating profit for the April-June period rose 38.3 percent on-year to 2.69 trillion won.
Sales increased 19.9 percent to 10.32 trillion won in the second quarter, which is the first time since the third quarter of 2018 that the company logged more than 10 trillion won in revenue.
Its operating profit was slightly lower than the market estimate, according to the survey by Yonhap Infomax, the financial data firm of Yonhap News Agency.
On an on-quarter basis, SK hynix’s net profit was up 100.3 percent, while operating income rose by 103.5 percent. Sales increased 21.5 percent from the first quarter.
“Demand for PC, graphics and consumer DRAM surged rapidly, while that for servers recovered during the April-June period, leading to an improvement in the business performance,” the company said.
“In addition, an increase in the sales of the advanced process products like 1ynm, 1znm DRAM and 128-layer NAND flash helped improve cost competitiveness, and increase both the revenue and the operating profit.”
SK hynix said its DRAM bit growth in the second quarter was in the mid-single digit percentage range, with the average selling price (ASP) growing by a percentage in the high teens.
For NAND flash, the company said the bit growth was in the low-single digit percentage range, while the ASP increased by about 10 percent.
SK hynix, the world’s second-largest DRAM maker, said it expects the favorable conditions to continue in the memory market through the second half of 2021, partly helped by seasonal demand.
“Specifically, the company anticipates the demand for NAND Flash products will grow amid the increasing adoption of high capacity storage in mobile devices, while that for enterprise solid state drives (SSDs) is also expected to increase.”
The company said the DRAM demand bit growth in the market this year is estimated to be in the low 20 percent range, while that of NAND is predicted to be in the mid-to-high 30 percent range.
SK hynix expected the company’s annual performance in the DRAM business to be in line with the market bit growth, while that of the NAND sector to outpace the market.
In a conference call, SK hynix said it expects inventory levels in the market to go down even next year.
“In general, we believe demand growth in memory products will continue,” said Noh Jong-won, the chief financial officer of SK hynix. “We expect memory demand moving from consumer products this year to enterprise applications next year.”
While maintaining its leadership in DRAM, SK hynix said it will focus on improving profitability in the NAND business. The company last year acquired Intel Corp.’s non-volatile memory business for US$9 billion.
The chipmaker said it expects to earn China’s approval of its Intel deal within the year. China is the only remaining country among eight nations where SK hynix filed for antitrust reviews.
For DRAM, SK hynix said it aims to increase the sales of its high-capacity server DRAMs larger than 64 gigabytes (GB).
It will also begin supplying 1anm DRAMs that are made with extreme ultraviolet (EUV) lithography technology and mass-producing DDR5 DRAM within the second half of this year.
For NAND Flash, SK hynix said it is looking for a turnaround in the third quarter by increasing the sales of 128-layer based mobile solution products and enterprise SSDs. It also plans to mass-produce 176-layer NAND flash later this year.
SK hynix said its 128-layer NAND accounted for more than 50 percent of its NAND product sales in the second quarter. By the end of this year, the company expects the combined sales portion of 128-layer and 176-layer NAND to be close to 80 percent.
Shares in SK hynix declined 0.85 percent to 116,000 won on the Seoul bourse, underperforming the broader KOSPI’s 0.24 percent gain. Its earnings results were released before the market opening.