Up-for-sale Hynix reports Q3 loss
By Kim Yoo-chul
Hynix Semiconductor, the world’s second-largest maker of computer memory chips, said Thursday it swung to a third-quarter net loss due to weakened demand for personal computers and other electronics products.
The company lost 562.6 billion won (about $496.8 million) in the three months to September, after posting a record profit of 1.04 trillion won a year earlier.
The loss is blamed on the sluggish global economy, battered by the eurozone debt crisis and stagnant U.S. growth, which has been hurting demand for chips and pushing down prices.
Hynix, which trails domestic rival Samsung Electronics in DRAMs, is hoping for a fourth-quarter rebound and is encouraged about the rising demand for NAND flash chips used in advanced mobile Internet devices such as smartphones and touch-screen tablets, which are expected to sell better as Christmas approaches.
Apple launched the newest version of its immensely popular smartphone, the iPhone 4s, earlier this month, and other electronics makers appear to have new phones and tablets they plan to release for the traditionally high-demand winter season.
It remains to be seen whether the expected rise in NAND sales will be enough to offset the continuous sluggish demand for DRAMs, which are used in PCs.
The company’s third-quarter revenue declined 30 percent year-on-year to 2.29 trillion won and its operating loss was 276.8 billion won, down sharply from an operating profit of 923.9 billion won a year ago.
The loss, Hynix’s first in more than two years, was partially attributable to the sliding value of the Korean won, which increased the value of the company’s overseas debt.
Creditors, who swapped their debts in Hynix for a stake in 2001 and 2002, are now seeking to sell their combined 20 percent stake.
SK Telecom, the country’s leading mobile-phone carrier, remains as the sole bidder for the chipmaker.
Kim Jung-soo, who heads Hynix’s investor relations department, stressed that the shaky third-quarter numbers won’t affect the company’s commitment to introduce advanced technologies to improve efficiency in chip production.
Hynix is still in better shape than its smaller Taiwanese rivals to invest in new technology, he said.
``Our plan is clear. By putting more resources into technology, we will continue to retain our position in our main markets,’’ Kim said.
Hynix plans to expand the portion of DRAM chips using 30-nanometer technology by 40 percent by the end of the year, and also to boost output of its flash memory chips based on 20-nanometer technology, company sources said.
``The market situation will improve and it remains to be seen whether Hynix manages to dramatically cut its losses or even reach a break-even point in the fourth quarter,’’ said Jeff Kang, an analyst at Daeshin Securities.
Hynix plans to invest 4 trillion won in facilities next year, up 16 percent from this year’s estimated 3.5 trillion won, according to industry sources.
Hynix’s dismal third-quarter numbers aren’t likely to ruin SK Telecom’s appetite to acquire the chipmaker.
``For us, nothing has changed. We are focusing on the long term rather than quarterly stat sheets,’’ said an SK Telecom executive, who didn’t want to be named.
``The chip business is volatile and cyclical according to the economic conditions. Uncertain economic forecasts in major economies will burden the entire chip industry. Still, Hynix is better positioned than its smaller Japanese and Taiwanese rivals to weather the current storm.’’
The stake held by Hynix’s nine creditors is currently valued at around 3.5 trillion won.
``The economic uncertainties will continue through the end of the year and weakness in PC demand will weigh on the entire industry,’’ Hynix chief financial officer (CFO) Kim Min-chul said in a conference call to analysts.
``However, a further drop in DRAM prices is unlikely as chipmakers are reducing their factory utilization rate, which will help bring back the balance in supply and demand.’’