Weak chip price hits SK hynix in 4th quarter
By Lee Min-hyung
SK hynix, the world’s second-largest memory chipmaker, posted 988.87 billion won ($822 million) in operating profit for the fourth quarter last year, down 40.7 percent from the previous year, due to sluggish demand for its memory chips.
In a regulatory filing, Tuesday, the company said it recorded 871.3 billion won in net income, down 46.3 percent from a year earlier. Its sales came in at 4.41 trillion won, down 14.2 percent, compared to the previous year.
The company attributed the weak performance to falling demand for its dynamic random access memory (DRAM) and NAND flash memory chips.
However, it has renewed its record-high yearly performance in the three consecutive years, posting 5.33 trillion won in operating profit last year, up 4.4 percent from a year ago.
“Concerns are growing in the memory market, due to sluggish demand for memory chips for both PCs and mobile devices,” Kim Joon-ho, SK hynix’ corporate center chief, told investors in a conference call. “Market conditions will be challenging during the first quarter, but we expect the market to become stable in the second half of the year, driven by growth in demand for solid state-drives (SSD).”
The company expects the mobile-embedded market to remain sluggish this year, as the growth of smartphones continues to slow due to the maturity of the low- to mid-priced smartphone market.
“But demand for high density mobile DRAM will grow in the first quarter, as premium handset makers are planning to launch their flagship models in the period,” he said.
The company said it will mass-produce 2Z-nanometer DRAM and 1X-nanometer DRAM to tackle the competitive dynamics in the memory chip industry.
SK hynix added it will also solidify its fundamental competitiveness in the three-dimensional (3D) NAND flash market. The company plans to mass-produce the 48-layer 3D NAND after its successful development, it added.
“We will focus on our capability with an optimal product mix to maximize our profits,” he said.
The memory chipmaker will invest some 6 trillion won this year in its facilities. A considerable amount of the spending will be on research and development for the 3D NAND products and for enhancing security conditions in its manufacturing facilities, the company said. The investment also includes costs required to switch its capacity from 2D to 3D NAND production, it added.
During the conference call, the company executive said it has decided to provide a cash dividend of 500 won per share to return profits to shareholders.
“This is about 8 percent of the payout ratio for this year,” he said. “We are planning to reach a payout ratio of 20 percent within two to three years.”