Hynix strikes record annual profit

By Kim Yoo-chul

Hynix Semiconductor, the world's second largest maker of computer memory chips, said its fourth-quarter profit plunged 83.2 percent year-on-year due to the subdued demand for personal computers and skidding chip prices.

However, the company’s profit for the entire year of 2010 represented a record annual figure, as it benefited from the global rise of smartphones, touch-screen tablets and other mobile Internet devices in the past 12 months.

Net profit reached 110.1 billion won (about $98.7 million) over the three months that ended in December, compared with 656.8 billion won from the same period a year earlier.

Revenue was down 1.8 percent year-on-year to 2.7 trillion won in the fourth quarter, while operating profit dipped 41 percent to 417.6 trillion won.

For the full year, Hynix was back in the black, posting 2.7 trillion won in net income on revenue of 7.9 trillion won in sales, which represented more than a 53 percent growth from 2009. Operating profit rose 17-fold to 3.3 trillion won last year.

Helped by a lucrative 2010, the chipmaker managed to lower its debt to 5.9 trillion won from the 6.9 trillion won of the previous year, company officials said. Hynix had 2.2 trillion won cash-equivalent assets at the end of last year.

Hynix is currently on the merger and acquisition shelf and creditors recently failed in their attempts to sell their stakes to LG Group, according to numerous industry sources.

``Despite drastic market volatilities in the second half, an enhanced product mix and a smoother migration towards value-added thinner technologies have paid off,’’ said Hynix spokesman Park Hyun.

``A price fall in computer memory chips hit us despite the increased shipments of DRAMs and NAND flash memories in the fourth quarter,’’ he said, adding that the company’s average selling prices of DRAM and NAND chips fell 28 percent and 12 percent, respectively, compared to the previous quarter.

Korea’s Samsung Electronics, the leading computer memory chip maker, and Hynix appear ahead of their rivals in Japan and Taiwan in the implementation of advanced production technologies.

Hynix said the portion of its DRAM chips with the latest 40-nanometer processing technology rose to 50 percent out of the total output.

The company is also planning to pump out high-end DRAM chips used for computer servers, graphics and mobile applications to exploit the boom in portable devices.

Usually, the second half of the year is seasonally unfavorable for most chipmakers as set makers are busy lowering inventories for the new year, resulting in weakened chip prices.

The memory chip market is highly volatile and susceptible to macro-economic situations as consumers usually cut back their spending on digital devices when economies struggle.

Memory chip prices will start increasing again in the first quarter as personal computer makers restock parts before manufacturing their latest models.

Also, the rising popularity of smartphones and tablets will further lift the demand for NAND flash memories, which could be a boon for Hynix.

Hynix is planning to increase capital investment to 3.4 trillion won in 2011 from 3.38 trillion won last year.