For 2018, SK hynix posted an all-time high net income of 15.5 trillion won on the back of strong global memory chip demand driven by data servers and high-end smartphones. (image: SK Hynix)
SEOUL, Jan. 24 (Korea Bizwire) — SK hynix Inc. said Thursday its fourth-quarter net rose 6 percent from a year earlier, which fell below the market expectation in the wake of slowing demand for memory chips and falling global sales prices.
The net profit for the world’s No. 2 memory chip producer came to 3.4 trillion won (US$3 billion) in the October-December period, compared with 3.2 trillion won posted a year, the company said in a regulatory filing.
Its sales gained 10 percent on-year to 9.9 trillion won, while operating profit backtracked 1 percent to 4.4. trillion won, the lowest since the first quarter of 2018.
Shipments of DRAM, used for temporary data storage in PCs and servers, declined by 2 percent and the average selling price by 11 percent on-quarter. For NAND flash, data storage memory mainly used for mobile devices, bit shipments increased by 10 percent, but the average selling price fell by 21 percent, the company said.
The net profit was below the market’s estimate of 3.8 trillion won compiled by Yonhap Infomax, the financial arm of Yonhap News Agency, based on 24 local brokerage houses. The sales estimate was 10.2 trillion won.
For 2018, SK hynix posted an all-time high net income of 15.5 trillion won on the back of strong global memory chip demand driven by data servers and high-end smartphones.
Its annual sales and operating profit reached 40.4 trillion won and 20.8 trillion won, respectively, breaking the previous record for the second consecutive year.
The firm’s operating margin in 2018 also stood at a record high of 51.5 percent, a remarkable level in the manufacturing sector.
“Last year, memory market conditions continued to be favorable, driven by high demand for data centers and high-performance mobile devices,” SK Hynix said in a release. “However, as memory demand slowed down in the second half and the supply shortage was resolved, the memory market environment rapidly changed.”
Following the stellar performance last year, SK hynix said it expects the memory chip market will slow down in 2019 due to weaker global demand and a drop in sales prices of DRAM and NAND products, the main pillars of its profits.
“The new year began amid persistent external uncertainties and slowing demand,” Cha Jin-Seok, the chief financial officer of SK hynix, said in a conference call. “We will focus on manufacturing high value-added products and technologies to deal flexibly with changing market conditions.”
The company said it will increase production of high-density DRAM modules used by server computers and strengthen its position in enterprise solid state drives (SSDs) and the mobile market based on NAND flash chips.
While the global memory chip market was projected to post slower growth following a two-year boom in memory, company officials painted a rosy picture for the semiconductor industry driven by technological advances in fields of artificial intelligence, cloud computing and autonomous vehicles.
“We firmly believe that the memory chip industry will continue to grow in the long term in line with technological advances,” Cha said.
Market watchers also expected the semiconductor market to undergo a correction period, with supply glut and falling demand from data centers and high-end phones in the first quarter but projected the condition to improve in the latter half of this year.
“The average sales price of DRAM products is expected to fall over 20 percent in the first quarter as server operators delay memory chip purchases amid the global economy slowdown, coupled with adjustment of inventory levels,” Lee Soon-hak, an analyst at Hanwha Investment & Securities, said.
“In the long-term, memory chip demand for data centers is expected to remain steady with gains made in such fields as artificial intelligence technology. The inventory adjustment is anticipated to end in the second quarter and could boost demand in the latter half of this year.”
Shares of SK hynix, whose market capitalization is 51.3 trillion won, jumped 5.54 percent to close at 70,500 won, this year’s highest price. The earnings report was released before the market opened Thursday.
(Yonhap)
