SK hynix rating up

By Kim Yoo-chul

Moody’s Investors Service has raised its rating for SK hynix by one notch from Ba2 from Ba1.

SK hynix’s rating upgrade comes as one of the few bright spots for Korea’s electronics industry, beleaguered by the global slump and a flood of Chinese smartphones.

Samsung is the No. 1 semiconductor manufacturer, and together with No. 2 SK hynix and Micron Technologies, the three account for 95 percent of global DRAM sales.

Annalisa DiChiara, Moody’s senior analyst, said in a statement, “The upgrade reflects the company’s improved operating performance and strong liquidity profile, which have resulted, in turn, from a more rationale DRAM market following industry consolidation.”

“Given the oligopolistic market structure, we also expect a more disciplined industry-wide approach to capacity additions over the next 12 to 18 months, which should help moderate any decline in price,” DiChiara said.

But the ratings agency said that this would only arise over the longer term if the company significantly improved its position in the memory market, in particular the NAND flash segment.

SK hynix is relatively weak in NAND flash memory chips.

The company said its fourth quarter would be better than the third.

A further credit upgrade will be likely from next year as the SK expects the NAND industry bit growth, a barometer measuring the healthiness of the semiconductor market, to reach 40 percent next year.

SK hynix is shrinking its 16 nanometer (nano) processing technology to 14 nano, the last node in 2D, so migration will be slow from there.

As it just started the triple level cell business, the company can make a meaningful contribution to 2015 bit growth.