DRAM slump will probably squeeze SK Hynix’s earnings

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DRAM slump will probably squeeze SK Hynix’s earnings

SK Hynix, the world’s second-largest memory chipmaker, will see its earnings restrained by weakening prices of dynamic random-access memory used in manufacturing PCs, a report said yesterday.

Macquarie said in the report that it is downgrading its rating on SK Hynix by one notch to “neutral” from “buy,” saying the company’s operating profit will be affected by the delayed recovery of the PC DRAM market.

It also slashed its target price for the Korean firm to 21,000 won ($18.40) from 35,000 won.
“The PC DRAM price is expected to fall about 20 percent in the third quarter of 2012,” said Daniel Kim, a Macquarie analyst.

The falling DDR3 price should have a negative impact on PC-related specialty DRAMS such as graphic and server DRAMs, the investment bank said.

“SK Hynix, as a pure memory semiconductor player, is unlikely to see a strong share price recovery amid the softening DRAM prices,” Kim said.

However, the investment bank said it remains optimistic of the long-term mobile DRAM opportunity for SK Hynix in light of the growing market for mobile devices.

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