SK Hynix disappoints in Q4 earnings report

SK Hynix posted weaker-than expected fourth quarter profits on Tuesday as fewer shipments of PCs and smartphones depressed demand for, and prices of, memory chips.

Operating profit for the last three months dropped by 41 percent to 989 billion won ($821 million) from a year earlier, while revenue shrank 14 percent on-year to 4.4 trillion won.

The figures undershot analysts’ estimates of 1.1 trillion won in profits and 4.6 trillion won in sales, according to market tracker FnGuide.

Net income, which excludes one-time gains and losses, fell to 871 billion won, down 46 percent compared to the same period in 2014.

An overall decline in demand for smartphones and PCs accelerated a slide in prices of DRAM and NAND, narrowing profit margins at the world’s second-largest memory chip maker.

Shin Hyun-joon, an analyst at LIG Investment & Securities, said that slowing demand for PCs affected the performance.

“Other than smartphones or other IT and consumer electronics, shipments of PCs were far lower than expected,” the analyst said, “The lower shipments hurt DRAM sales.”

“In the fourth quarter, the selling prices of DRAM declined by 10 percent while those of NAND Flash memory dropped by 15 percent,” the company said in a statement.

SK Hynix added that shipments of its DRAM products edged down 1 percent, whereas those of its NAND products increased by 4 percent.

The results ended Hynix’s winning streak of maintaining over 1 trillion won in profit every quarter since the January-March period of 2014.

However, the semiconductor company managed to pull off record-high annual sales and profits for the third consecutive year.

Net annual sales for 2015 were 18.8 trillion won, a 10 percent increase compared to the previous year. Annual operating profits reached 5.3 trillion won, up 4 percent from a year ago.

The chipmaker vowed to maintain its competitiveness by focusing on DRAM chips with a new 1X-nano (18nm) processor and 3D NAND flash chips.

“SK Hynix will embark on mass production of 36-layer and 48-layer 3D NAND flash chips as soon as development is completed,” the company said.

The company added that it will execute aggressive cost-cutting measures while using this year’s investment to strengthen its “fundamental competitiveness.”

SK Hynix earmarked 6 trillion won for investment this year earlier this month, saying a large chunk of it will go toward next-generation products like 3D memory chips.

Some of the investment for this year will also be used in the construction of new production lines in Cheongju, North Chungcheng, the company said.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]