SK Hynix posts record sales and profits

SK Hynix, the world’s second-largest manufacturer of computer memory chips, has posted record sales and profits for a second quarter in a row, thanks to a mix of improving products and higher chip prices.

According to SK Hynix yesterday, it posted sales of 4.084 trillion won ($3.85 billion) in the third quarter of 2013, with an operating profit of 1.164 trillion won, both of which beat its record-setting second quarter.

Net profits reached 958 billion won in the July to September period, compared with a net profit of 2.04 billion won for the same period last year, SK Hynix said in a regulatory filing.

The company’s third-quarter revenue of 4.08 trillion won represents a 68.5 percent jump from last year’s third quarter. And its operating profit of 1.16 trillion won was a drastic turnaround from last year’s operating loss of 24.02 billion won.

The company, whose technology is found in gadgets made by Apple and Sony, said it was able to top 4 trillion won in sales for the first time due largely to the rise in the price of dynamic random-access memory (DRAM) chips and increased shipments of 16 nanometer technology node NAND flash chips stemming from the launch of new mobile products.

While the average price of DRAM chips soared 5 percent in the third quarter compared to the previous quarter due to a tighter supply, exacerbated by last month’s fire at Hynix’s factory in Wuxi, China, its shipments declined 2 percent.

DRAM demand has been rising because of its increasing use in mobile products and the rising price of PC and server DRAM. NAND Flash prices, on the other hand, fell 6 percent, but demand grew 11 percent from the previous quarter thanks to the launch of new mobile products.

For the next quarter, SK Hynix predicts the DRAM market will continue to grow due to the increase in DRAM adoption in servers and two-in-one PCs, which combine laptop and tablet functions.

While its rival Samsung Electronics focuses on developing DRAM chips used in mobile phones, SK Hynix chips are designed for use on personal computers. For NAND Flash, the company predicts the demand to depend on the sales of new mobile products and SSD market expansion. Meanwhile, SK Hynix said it has completed developing 20 nanometer mid-level DRAM and 10 nanometer NAND flash, and is ready to begin production.

“On the back of our industry-leading technology and competitiveness, we plan to focus on generating consistent and stable profits in the changing memory industry,” said a spokesman for SK Hynix.

As of the second quarter, SK Hynix closely trails behind Samsung Electronics for global DRAM market share with about 30 percent each, while for flash memory SK Hynix is ranked third, at 14.6 percent, following Samsung Electronics and Toshiba.

Meanwhile, shares of SK Hynix closed 3.47 percent lower yesterday, finishing at 31,950 won, despite the record-high quarterly earnings, as experts express worries that operations of the company’s China plant, which produces 15 percent of the world’s computer memory chips, could be delayed by a month.

BY KIM JUNG-YOON [kjy@joongang.co.kr]