SK Hynix sees first quarterly profit fall in two years

January 24, 2019
Korean chipmakers—led by the behemoth Samsung Electronics—have enjoyed record profits in recent years as prices for their products soared

The world's second-largest memory chip maker, South Korea's SK Hynix, saw operating profits drop for the first time in two years in the fourth quarter as prices fell, it said Thursday.

Korean chipmakers—led by the behemoth Samsung Electronics—have enjoyed record profits in recent years as prices for their products soared.

But demand has started to decline as global market supply increases, after manufacturers invested billions in new factories.

SK Hynix supplies chips to companies from US giant Apple to China's Huawei Technologies, and recorded operating profits of 4.46 trillion won ($3.9 billion) in the October to December period, it said.

It was a 0.8 percent decline year-on-year, but the quarter-on-quarter changes were dramatic: revenues dropped 13 percent, operating profits slumped 32 percent, and net income fell 28 percent.

"As memory demand slowed down in the second half and the supply shortage was resolved, the memory market environment rapidly changed," the company said in a statement.

Breaking down the details, it said prices for DRAM chips—used in smartphones and servers—fell by 11 percent between the third and fourth quarters and volumes slipped two percent. NAND flash shipments rose 10 percent, but the average price slumped 21 percent.

The weak demand was "linked to growing macroeconomic uncertainties", the company added.

But SK Hynix shares closed up 5.54 percent.

For the full year 2018, the company made operating profits of 20.9 trillion won, up 52 percent, on sales 34 percent higher at 40.5 trillion won. Net income jumped 46 percent to 15.5 trillion won. All three measures were record highs.

The figures come after Samsung Electronics earlier this month flagged a 29-percent drop in its quarterly profits, citing mounting competition in China and falling .

Weakening overseas demand for memory chips—one of South Korea's key trade items—is bad news for its export-driven economy.

Bank of Korea governor Lee Ju-yeol said Thursday that the world's 11th-largest economy could face a "considerable burden if the prolonged downturn continues in the semiconductor industry".

Explore further: SK Hynix posts record profits on rising demand

Related Stories

SK Hynix posts record profits on rising demand

October 25, 2018

South Korea's SK Hynix, the world's second-largest memory chipmaker, posted record profits in the third quarter, the company said Thursday, citing resilient global demand.

SK Hynix posts record quarterly profits

July 26, 2018

The world's second-largest memory chipmaker SK Hynix posted record profits in the second quarter, the South Korean company said Thursday, citing strong global demand.

SK Hynix posts record profits on rising demand

October 26, 2017

South Korean chipmaker SK Hynix posted record profits in the third quarter, it said Thursday, fuelled by strong demand for its memory chips coupled with rising global prices.

SK Hynix posts big jump in Q1 net profit

April 24, 2018

South Korea's SK Hynix, the world's second-largest memory chip maker, on Tuesday announced a big jump in first-quarter net profit thanks to strong global demand.

Recommended for you

How our plants have turned into thieves to survive

February 18, 2019

Scientists have discovered that grasses are able to short cut evolution by taking genes from their neighbours. The findings suggest wild grasses are naturally genetically modifying themselves to gain a competitive advantage.

Great white shark genome decoded

February 18, 2019

The great white shark is one of the most recognized marine creatures on Earth, generating widespread public fascination and media attention, including spawning one of the most successful movies in Hollywood history. This ...

Light-based production of drug-discovery molecules

February 18, 2019

Photoelectrochemical (PEC) cells are widely studied for the conversion of solar energy into chemical fuels. They use photocathodes and photoanodes to "split" water into hydrogen and oxygen respectively. PEC cells can work ...

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.