By Kim Yoo-chul
SK hynix, the world’s second-largest maker of computer memory chips, said Wednesday that it swung to profit in the third quarter from a year earlier, defying a dismal global market for personal computers.
For the three months through September, the company posted a net profit of 2 billion won (about $1.8 million), compared to a net loss of 563 billion won a year earlier. Third-quarter operating loss was 15.1 billion won, compared with a 277 billion won deficit a year earlier, while sales rose 5.8 percent year-on-year to 2.4 trillion won.
While the level of profit was nothing to write home about, the figures still represent an impressive showing because chipmakers have been struggling mightily in the global downturn, which has been eating into the market for high-priced technology products such as computers.
The rise in mobile Internet devices like smartphones and touch-screen computers is also kicking the traditional PC market in the teeth.
SK hynix officials have expressed confidence that things will get better from now because it expects orders for chips to increase in the fourth quarter with handset vendors rushing to put out new smartphone models ahead of the Christmas shopping season.
``We are expecting a jump in demand for DRAM and flash-type memory chips thanks to the expected release of new smartphones. DRAM prices will remain weak in the current quarter but output cuts by some chipmakers will help soften the price fall,’’ said SK hynix official Kim Joon-ho in a conference call.
Kim said that Apple’s new line of iPhones and iPads as well as various mobile Internet devices powered by Microsoft’s Windows 8, which have just begun to hit the shelves, will benefit SK hynix’s bottom line for the fourth quarter.
``We don’t want to sound too bullish about Windows 8 but it seems clear that the release of the new operating system will jolt the idle demand for PCs to some degree,’’ Kim said.
``The rising demand for low- to mid-priced smartphones in China is another positive development (for us). Our chip inventories had three weeks at the end of the third quarter, compared to 1.7 weeks from the previous quarter, but this isn’t much of a concern considering the expected rise in demand.’’
The company’s average selling price, a key barometer of profitability for chipmakers, fell 8 percent across DRAM chips in the third quarter, narrower than the industry average of a 14 percent drop.
DRAMs account for around 70 percent of SK hynix's revenue while flash-type memory chips account for around 25 percent. The average prices of the company’s flash-type chips rose 4 percent.
SK hynix isn’t too worried about the outlook for flash-type memory chips, considering the explosion of mobile Internet devices.
SK hynix also confirmed that it will invest more to further accelerate its ongoing efforts to manufacture thinner chips. As part of its strategy consistency, the company plans to buy additional extreme ultraviolet equipment next year.
``We are in the process of preparing chips with highly-advanced 2Y level technology with mass production of the profitable chips coming within the first half of next year,’’ said Kim.
He also said SK Hynix has agreed to buy additional equipment for its EUV initiative from Netherlands-based firm ASML.