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(2nd LD) SK hynix Q3 net more than doubles on Huawei effect, mobile demand recovery

All News 09:45 November 04, 2020

(ATTN: CHANGES headline; ADDS more info paras 4-5, 8, 13-16; 2nd photo)

SEOUL, Nov. 4 (Yonhap) -- SK hynix Inc., South Korea's second-largest chipmaker, on Wednesday reported estimate-beating third-quarter earnings on the back of a recovery in demand for mobile chips amid the pandemic.

Its net profit stood at 1.07 trillion won (US$950.4 million) in the third quarter of the year, up 117.5 percent from a year earlier, the company said in a regulatory filing.

Operating profit for the July-September period more than doubled to 1.29 trillion won compared with 472.6 billion won a year ago, while sales jumped 18.9 percent on-year to 8.12 trillion won.

SK hynix said increased purchases of DRAM consumer products by a "certain customer," possibly referring to China's Huawei Technologies Co., boosted its earnings.

Huawei aggressively procured semiconductors ahead of the U.S. export restrictions that were put in place on Sept. 15.

Its sharp increase in third-quarter earnings was also attributed to a base effect since the company suffered one of its worst performances last year due to an industrywide slump.

Compared with the second quarter, its operating profit plunged 33.2 percent, while sales fell 5.6 percent.

This undated file photo shows the corporate logo of South Korean chipmaker SK hynix Inc. (Yonhap)

This undated file photo shows the corporate logo of South Korean chipmaker SK hynix Inc. (Yonhap)

By sector, DRAM accounted for 74 percent of SK hynix's revenue in the third quarter, down 5 percentage points from a year earlier, while the revenue portion of NAND flash reached 24 percent, up 4 percentage points from a year ago.

For DRAM, SK hynix said it "proactively responded" to increasing demand for mobile and graphics DRAM products.

"In spite of decreased server DRAM demand, the company's DRAM bit shipment in the quarter still increased by 4 percent quarter-on-quarter," SK hynix said. "However, due to the unfavorable price of server DRAM and certain other DRAM products, the average selling price decreased by 7 percent quarter-on-quarter."

SK hynix also saw increased NAND flash bit shipments in the third quarter due to strong sales in mobile products and solid state drives (SSDs) for new gaming consoles.

"The sales expansion boosted the NAND flash bit shipment by 9 percent quarter-on-quarter," it said. "Still, the weakening price flow of the server products led to the decrease of the average selling price by 10 percent quarter-on-quarter."

SK hynix said it expects a seasonal increase of mobile market demand to continue in the fourth quarter, as smartphone manufacturers intensify competition with the release of new smartphones, while PC market demand is estimated to remain strong as well. Server demand is forecast to be more moderate compared to the first half, it added.

This photo provided by SK hynix Inc. shows the company's NAND flash chips. (PHOTO NOT FOR SALE) (Yonhap)

This photo provided by SK hynix Inc. shows the company's NAND flash chips. (PHOTO NOT FOR SALE) (Yonhap)

In the current quarter, SK hynix expected its DRAM bit growth to be up by a mid-single-digit percentage compared to the previous quarter, while that of NAND flash would grow by a low single-digit percentage.

SK hynix said it will try to expand sales of its 1Ynm low-power double data rate (LPDDR) 5 DRAM and increase its presence in the UFS-based multichip package (uMCP) market. The company also vowed to make more sales of high-capacity server products and high bandwidth memory (HBM) products.

For NAND Flash, SK hynix said it aims to expand sales of 128-layer NAND flash products, which it began selling full-scale in the third quarter.

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