SK Hynix’s Q3 profits weaker than expectations

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SK Hynix’s Q3 profits weaker than expectations

SK Hynix’s third-quarter profit missed analysts’ estimates as weakening global memory chip demand depressed prices, outweighing orders from Apple. Shares fell.

Net income excluding minority interest was 1.05 trillion won ($923 million) in the three months ended Sept. 30, the Icheon-based company said Thursday. That compares with the 1.09 trillion won average of 26 analysts’ estimates compiled by Bloomberg.

Slackening demand for personal computers, smartphones and TVs is undermining sales of chips SK Hynix supplies for the devices.

Global shipments of personal computers are forecast to contract 8.7 percent this year, wider than the 2 percent contraction seen previously, Eugene Investment & Securities said in an Oct. 2 report.

“Memory chip prices in the fourth quarter will be the key issue, as earnings will heavily depend on the pace of the decline,” said Greg Roh, an analyst at HMC Investment Securities. “For 2016, demand will continue to remain weak while mobile chip prices will remain on a downturn, so it’s the matter of at what level the stock price can hit the bottom.”

Shares of SK Hynix fell 5.1 percent to 31,950 won. The stock has fallen 33 percent this year, compared with a 5.6 percent gain in the benchmark Kospi index.

Prices for DDR3 4-gigabit dynamic random access memory, DRAM, chips averaged $2.37 in the quarter, compared with $4.20 a year earlier, according to data from inSpectrum Inc.

Apple is SK Hynix’s largest customer, providing about 11.4 percent of its sales, according to data compiled by Bloomberg. The company sold 13 million iPhones in their debut weekend. Bloomberg
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