Memory chip maker surpasses 1 trillion won in operating profit
By Kim Tae-jong
SK hynix Thursday said it posted an operating profit of 1.05 trillion won in the first quarter, surpassing the initial market estimation of 978 billion won.
The world's second-largest chip maker is expected to enjoy robust sales for the rest of the year thanks to steadily growing demand for its products after bottoming out in the previous quarter.
According to the firm, sales jumped by 34.6 percent to 3.74 trillion won in the January-March period, compared to the same period last year.
The operating profit also sharply increased to 1.05 trillion won from last year's 316.9 billion won.
It marks the first time the firm has surpassed the 1-trillion-mark in operating profit since the third quarter of 2013, when it posted a record operating income of 1.16 trillion won.
The company attributed the impressive result to the improved sales of dynamic random access memory (DRAM) chips and the resumption of operations of its production line in China, which was halted after fire in September.
The sales volume of DRAMs jumped by 20 percent from the previous quarter, with their prices stabilizing following a steady growth of demand, it added.
This is big enough to offset the losses from its NAND flash memory chip business, which saw an 8 percent drop in quarterly sales from the fourth quarter of 2013.
In its total sales, DRAM sales account for 80 percent with NAND flash memory chip sales at 17 percent. SK hynix currently accounts for about 26 percent of the global market for mobile DRAMs, while its market share for NAND flash memory stands at 10 percent.
SK hynix said it will continue to enjoy solid sales, citing growing demand for DRAM and NAND flash memory.
It said China launched the long-term evolution (LTE) network in December, which will boost the demand for DRAMs.
It also said the NAND flash sector is expected to rebound from the second quarter onwards, thanks to the rising demand for mobile devices.
"In the second quarter when we expect rising demand for mobile devices, we plan to increase the shipment volume of NAND flash memory by about 45 percent from the previous quarter," the firm said during a conference call after it released the first-quarter earnings.
The stock price of SK hynix only gained 150 won to close at 40,900 won, Thursday, as the expectation for better performances was already reflected in the previous day, when it jumped by 2.39 percent from Tuesday's close.