Huawei issue has limited impact on SK
An aerial view of SK's semiconductor factory in Icheon, Gyeonggi Province, Thursday. Yonhap
By Kim Yoo-chul
By Kim Yoo-chul
While the United States has been pressuring allies to join its anti-Huawei campaign, amid Washington's allegations the Chinese company is either owned or controlled by the Chinese military, the world's No. 2 memory chip supplier SK hynix said the Huawei conflict would not have any substantial impact on its business.
“Regarding questions on how Washington's pressure on Huawei will impact SK's memory chip business, we can say the issue is being managed well. The so-called 'Huawei issue' was already factored into our contingency business plan which we designed after the outbreak of COVID-19 early this year,” the Korean chipmaker told investors upon announcing its second-quarter earnings.
“It's rather difficult for us to specify the estimated impact on us from Washington's move on Huawei. However, because it's possible for us to see various continuing risk factors, SK plans to respond to these variables properly in the latter half of this year through a better mix of products and greater flexibility in terms of supplying chips,” the company added in the earnings conference call. Huawei is one of SK's key clients with the Chinese company procuring both DRAM and NAND chips from the SK Group affiliate.
The company didn't elaborate. Earlier thoughts were that Huawei had asked SK and market leader Samsung for a stable memory chip supply despite increasing pressure from Washington to ban the use of Huawei gear. The Trump administration recently sent a document to Congress containing the names of 20 Chinese companies that it found to be backed by the People's Liberation Army. The designation by the Pentagon also enables U.S. President Donald Trump to declare a national emergency and then penalize the companies on the list with possible sanctions if they operate in the United States. As well as Huawei, China Mobile and China Telecom were reported to be included.
Huawei, the world's largest telecom equipment supplier, spends around 10 trillion won ($8 billion) on DRAM and NAND flash memory chips from SK and Samsung every year.
During the call, SK said while it's inevitable for the entire memory chip industry to see prices decline in the latter half of this year, its impact will also be short-lived. A company official said, “Given anticipated tight supply in chips thanks to the rising demand for memory-embedded digital products amid COVID-19, demand for memory chips will remain healthy in the mid- to long-term. The impact of any price correction in DRAM chips will be limited.”
SK Hynix reported its net profit more than doubled to 1.26 trillion won during the last quarter from a net profit of 537 billion won, year-on-year. Operating profit for the April-June period more than tripled to 1.94 trillion won. Sales increased 33.4 percent year-on-year to 8.6 trillion won over the given period. Its operating margin reached 23 percent, up 13 percentage points from a year earlier.
Kim Yoo-chul