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(3rd LD) SK hynix posts record quarterly sales, sees growth momentum continue

All News 15:58 October 26, 2021

(ATTN: ADDS stock price in last para; CHANGES headline)
By Woo Jae-yeon

SEOUL, Oct. 26 (Yonhap) -- SK hynix Inc., South Korea's No. 2 chipmaker, reported strong third-quarter earnings Tuesday on the back of solid memory chip demand for severs and smartphones, and rising prices.

Net profit for the three months that ended Sept. 30 leaped by 205.7 percent from a year earlier to 3.31 trillion won (US$2.8 billion).

Operating profit jumped 220.4 percent from a year ago to 4.17 trillion won, the highest since the fourth quarter of 2018.

Sales increased 45.2 percent to a quarterly record of 11.8 trillion won, marking the second consecutive quarter that the company logged more than 10 trillion won in sales.

The corporate logo of South Korean chipmaker SK hynix Inc. (Yonhap)

Demand for consumer products and servers continued to spur earnings growth.

SK hynix, the world's second-largest DRAM maker behind Samsung Electronics Co., expects the favorable market conditions to continue for the rest of the year, spurred on partly by seasonal demand.

"Despite the concerns over recent global supply chain disruptions, the remarkable quarterly performance signals that the semiconductor memory industry is continuing its growth momentum," Noh Jong-won, executive vice president and head of the corporate center at SK hynix, said during the company's earnings call Tuesday morning.

The company said it will react flexibly to volatile market conditions going forward and continue to focus on enhancing profitability.

In particular, the company looks to continue improving the competitiveness of its NAND flash business, which has become profitable in the third quarter, with a goal to close the acquisition of Intel's NAND and SSD business by the end of this year.

"After the completion of the acquisition, SK hynix will establish a complementary product portfolio, which maximizes both companies' strengths, and seek to achieve economies of scale," Noh said.

But the company's upbeat statement seems at odds with some gloomy outlook for the overall memory chip market, on which the company's revenue is heavily dependant.

DRAM and NAND account for more than 90 percent of SK hynix's revenue. The company is the world's second-largest DRAM supplier behind Samsung Electronics Co. and the No. 4 vendor in the global NAND market, according to industry tracker TrendForce.

The research firm warned DRAM prices will fall by 15 to 20 percent annually in the fourth quarter and enter a downward trend early next year, as the supply is expected to outstrip demand.

"DRAM contract prices are likely to exit a bullish period that lasted three quarters and be on the downswing," it said in a report released earlier this month.

"This decline can be attributed to not only the declining procurement activities of DRAM buyers going forward but also the drop in DRAM spot prices ahead of contract prices," it added.
SK hynix gained 2 percent to 102,000 won on robust third-quarter earnings.

SK hynix's share rose 2 percent to close at 102,000 won, outperforming the broader KOSPI's 0.94 percent gain.

The photo, provided by SK hynix Inc. on Oct. 20, 2021, shows the high bandwidth memory 3 (HBM3) DRAM, which the company dubs as "the world's best-performing DRAM." (PHOTO NOT FOR SALE) (Yonhap)


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