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(2nd LD) SK hynix swings to black in Q4 on strong mobile chip demand

All News 09:34 January 29, 2021

(ATTN: ADDS more info paras 5, 9-16, 2nd photo)
By Joo Kyung-don

SEOUL, Jan. 29 (Yonhap) -- SK hynix Inc., South Korea's No. 2 chipmaker, on Friday reported robust fourth-quarter earnings on strong mobile chip demand amid the pandemic.

Its net income reached 1.76 trillion won (US$1.6 billion) during the October-December period, turning from a loss of 125.6 billion won a year earlier.

The world's second-largest DRAM producer said its fourth-quarter operating profit more than quintupled to 965.9 billion won from a year ago. Revenue increased 15 percent on-year to 7.96 trillion won.

"Despite the decreased revenue due to the falling prices and the weak dollar, the company achieved an operating profit of 298 percent on-year by actively responding to the strong mobile demand from the third quarter," SK hynix said.

In the fourth quarter, DRAM bit shipments increased by 11 percent from the previous quarter, but the average selling price decreased by 7 percent. NAND flash bit shipments rose 8 percent quarter-on-quarter, but the average selling price suffered an 8 percent decline.

This photo taken Oct. 20, 2020, shows the corporate logo of SK hynix Inc. at its plant in Icheon, 80 km south of Seoul. (Yonhap)

For 2020, the company reported net profit of 4.75 trillion won, up 136.9 percent from a year earlier.

Its operating profit stood at 5.01 trillion won last year, compared with 2.71 trillion won from the previous year. Annual sales rose 18.2 percent to 31.9 trillion won.

"Due to the global pandemic and the intensifying trade disputes last year, the memory market showed a sluggish trend," said Noh Jong-won, head of the corporate center at SK hynix. "The company expanded its server market share based on its quality competitiveness, which resulted in an increase in the revenue and the operating profit by 18 percent and 84 percent, respectively, compared with the previous year."

For this year's DRAM market, SK hynix projected that demand for server products will increase due to investment in new data centers by global companies, while mobile chip demand is also expected to remain high on 5G smartphone shipments.

In terms of market supply, the company expected the DRAM industry to see a limited increase.

For the NAND flash market, the company projected that the market trend will begin recovering in the second half of this year, adding that high inventory levels will be resolved during the first half of the year with strong demand for solid state drive (SSD) products.

This photo provided by SK hynix Inc on July 23, 2020, shows the company's HBM2E high-speed DRAM chips. (PHOTO NOT FOR SALE) (Yonhap)

To cope with rising market demand, SK hynix said it will focus on selling more high-value-added DRAM products, such as HBM2E, following the rise of the high-performance computing (HPC) and artificial intelligence (AI) systems market.

For NAND, the company said it plans to diversify its products, such as pursuing customer certification for 128-layer solid state drives (SSDs) for servers.

To boost its technology leadership, SK hynix added it plans to raise cost competitiveness by producing the fourth-generation 10-nanometer (1Anm) DRAM products and 176-layer 4D NAND flash products.

Meanwhile, SK hynix announced a per-share dividend of 1,170 won, giving more than 800 billion won in total to its shareholders.

The company also said it will establish an environment, social and governance (ESG) management committee to discuss new opportunities in this field. The company recently issued its first-ever green bond to support its environmental-friendly projects.

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