Hynix boasts ninefold profit increase in Q2

SK Hynix, Korea’s second-largest chipmaker, said Tuesday that its second-quarter net profit shot up by nearly nine times, apparently helped by the strong price of DRAM and NAND chips.

The record-breaking net profit came to 2.46 trillion won ($2.2 billion), soaring from 286 billion won a year earlier, the company said in a regulatory filing.

Operating profit also advanced 573.7 percent to reach a record 3.05 trillion won. Sales came to an all-time high of 6.69 trillion won in the April-June period, advancing 69.8 percent from last year.

The operating margin came to a whopping 46 percent, also setting a new record by beating the 40 percent posted in 2004.

The figures are line with an estimated net profit of 2.3 trillion won suggested by local brokerage houses and compiled by Yonhap Infomax, the financial arm of Yonhap News Agency. The securities firms estimated sales and operating profit at 6.8 trillion won and 2.9 trillion won, respectively.

SK Hynix said the robust performance is attributable to favorable market conditions coupled with the rising price of chips. The manufacturer said its shipments and the average price of DRAM chips advanced 3 percent and 11 percent, respectively, from the previous quarter on the back of expanded sales of server DRAM products.

While the shipment of NAND chips edged down 6 percent from the previous quarter on slow demand for smartphones, SK Hynix said the average sale price still moved up 8 percent over the cited period.

The company said it expects to rake in strong earnings in the second half of 2017 on the back of server DRAM products and the release of new smartphones.

Experts said rising demand for memory chips around the world amid a supply shortage will allow SK Hynix to enjoy an operating profit of nearly 3.5 trillion won in the third quarter.

The Korean tech giant’s latest efforts to join the acquisition of Toshiba’s memory business are also casting a brighter outlook over its profitability, they added.

SK Hynix said it plans to expand production of DRAM and NAND chips this year to meet rising global demand.

“As for DRAM chips, we cannot fulfill the market’s demand just by changing production methods,” the company said. “By the end of this year, we plan to expand production facilities for DRAM and NAND products.”

In line with these efforts, SK Hynix said it is also considering completing construction projects in China and Cheongju, about 120 kilometers (75 miles) south of Seoul, by 2018, instead of the original plan of 2019.

The company added it is not currently considering a share buyback amid business uncertainties, including the Toshiba deal.

Shares of SK Hynix ended on Tuesday at 70,400 won, down 3.6 percent from the previous trading session. The second-quarter report was released before the market opened on Tuesday. YONHAP