SK hynix monthly profit tops W1 tril.
By Yoon Sung-won
SK hynix posted a record operating profit of 3.05 trillion won ($2.73 billion) in the second quarter, jumping 574 percent year-on-year, amid the global semiconductor market boom, the company said Tuesday. This means the company gained profits at the rate of about 1 trillion won per month.
In its regulatory filing on Tuesday, SK hynix said its sales also reached a record high of 6.69 trillion won, up 70 percent from a year ago. It posted 3.94 trillion won in sales and 452.9 billion won in operating profit in the second quarter of 2016.
In terms of profitability, the company’s operating profit to sales ratio was 46 percent in the quarter.
With the world’s top memory chipmaker Samsung Electronics projected to have recorded some 8 trillion won of operating profit in the second quarter from the semiconductor business alone, Korea’s semiconductor industry may record over 11 trillion won of quarterly profit.
SK hynix said its record performance is attributable to the sharp rise in average prices of both DRAM and NAND Flash memory products amid supply shortage. In particular, rapid penetration of cloud services and increasing popularity of premium smartphones in China expanded the demands on DRAMs for servers and high-performance memory chips.
The company said the supply may not keep up with the demands anytime soon.
“In the second quarter, the average sales prices of DRAM and NAND Flash went up by 11 percent and 8 percent, respectively, from the previous quarter,” SK hynix President and Chief Operating Officer Lee Seok-hee said. “Strong demands of DRAMs for servers will lead the market growth in this sector in the long-term perspective. New smartphones scheduled to be released in the latter half will also boost the demand for NAND Flash memory products.”
To meet surging demand worldwide, SK hynix pledged to expand production of both DRAM and NAND Flash memory products within this year.
“We are considering expansion of DRAM and NAND output by the end of this year,” a company official said during a conference call, Tuesday. “In particular, we will introduce extra manufacturing equipment for DRAMs because we cannot meet the market demands only by changing processes.”
SK hynix currently is building new plants in Korea and China ― one for DRAM in Wuxi in China and the other for NAND in Cheongju, North Chungcheong Province. It has originally planned to complete the plants by the first half of 2019. But the company said it may expedite the completion to the fourth quarter of 2018 to meet the explosive surge of market demands.
Meanwhile, SK hynix and its consortium partners in Japan and the United States are working on the acquisition of Toshiba’s semiconductor unit. Though the SK hynix consortium has been chosen as the preferred bidder, the company will need extra efforts to finalize the deal.
“The future of SK hynix in the NAND Flash sector heavily relies on the consortium’s acquisition of the Toshiba unit,” an industry source said. “Its market presence may be damaged if the acquisition ends in failure.”
SK hynix closed at 70,400 won on the Seoul bourse, Tuesday, down 3.56 percent from the previous day.
LG Display
Meanwhile, LG Display also announced that its second-quarter operating profit soared 1,712 percent from a year ago to 804.3 billion won. Its sales reached 6.62 trillion won, up 13 percent year-on-year.
The world’s largest liquid crystal display (LCD) maker attributed the sharp profit increase to the expansion of sales of its panels for ultra large-sized ultra high-definition TV and high-resolution info-tech products as well as steady growth in new businesses.
At the same time, the Seoul-based firm unveiled its plan to invest 7.8 trillion won to build facilities for the production of organic light-emitting diode (OLED) panels, which it will begin in the third quarter of the year for completion in the second quarter of 2019.