SK hynix expected to enjoy better earnings

By Kim Yoo-chul

SK hynix, the semiconductor affiliate of SK Group, is expected to reap another record profit this year as demand for memory chips to be used in tablets and smartphones remains healthy, according to a global analyst, Wednesday.

“Based on such strong optimism, SK hynix is expected to reach a net debt of zero in the second quarter of this year and the company’s management has confirmed that they are open to shareholder returns,” Bernstein Research’s senior analyst Mark C. Newman said in a report, Wednesday.

He said SK hynix’s chief financial officer (CFO) and the head of its investor relations team shared the firm’s upbeat outlook with global analysts and institutional investors at a recent investor relations (IR) session in the United States.

Its CFO and IR chief made it clear that the firm will focus on improving its technology and chips before adding capacity, according to the analyst.

SK hynix is a solid No. 2 in the global memory chip market. As the leader in pure memory chip production, the management stressed most chip wafer capacity will be flat and has also vowed not to add capacity in DRAM chips even over the long-term.

Bernstein Research said that the chip supplier will likely decrease production by around 10 percent this year due to more steps required as the company adopts the 25-nanometer level processing technology.

“Despite current seasonal weakness, it will take time for DRAM inventories to normalize and by then we expect demand to pick up again for the smartphone, tablet and PC building cycle. Meanwhile, NAND chip capacity should be returned to full capacity by the end of February following the return of equipment that was temporarily assigned to DRAM production,” said Bernstein.