Chip blues hit SK Hynix as it misses Q2 estimate

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Chip blues hit SK Hynix as it misses Q2 estimate

SK Hynix’s second-quarter profit missed analysts’ estimates as weakening demand for personal computers and smartphones damped prices for its memory chips.

Net income, excluding income from its minority interests, was 1.11 trillion won ($956 million) in the three months ending in June, the company said Thursday. That compares with the 1.16 trillion-won average of 23 analysts’ estimates compiled by Bloomberg.

Slowing demand for smartphones and computing devices in its key markets, especially China, reduced orders for the chipmaker’s dynamic random access memory chips. Researcher Gartner this month almost halved its 2015 worldwide semiconductor sales growth forecast to 2.2 percent citing softness in electronic equipment segments, including PCs.

“Steep price decline of memory chips for personal computers was the biggest culprit,” Jay Yoo, an analyst at Korea Investment & Securities, said. “Demand for PCs will continue to remain tepid throughout the year.”

Apple, SK Hynix’s largest customer, on Tuesday reported sales of 47.5 million iPhones last quarter, missing analysts’ estimates. Apple contributes about 9 percent of the chipmaker’s sales, according to data compiled by Bloomberg.

U.S. competitors have painted a darkening industry outlook, mainly due to weaker demand for PC components. Micron Technology, the biggest U.S. maker of memory chips, last month forecast fiscal fourth-quarter sales that fell short of analysts’ estimates after third-quarter sales fell 3.2 percent.

SK Hynix’s operating profit for the quarter was 1.38 trillion won, compared with the 1.46 trillion won average of estimates.

The Korean chipmaker said after the market closed on Wednesday that it would buy back 22 million shares between July 23 and Oct. 22. The value of the transaction, based on the stock’s closing price on Tuesday of 39,050 won, would be 859.1 billion won, according to the regulatory filing.
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