SK hynix reports a 53 percent jump in 1st quarter net profit

SK hynix reported 53 percent growth in net profit in the first quarter on year to 992.6 billion won ($892 million).

Revenue grew 18 percent to 8.5 trillion won, while operating profit during the same period jumped 66 percent to 1.3 trillion won, according to a company announcement Wednesday.

The world's second-largest memory maker, SK hynix said the strong performance was driven by strong memory-chip demand across all applications and improved yield rates, which refers to the portion of flawless chips per production volume.

The trend for remote work and education has increased demand for computers. The heated competition among Chinese handset makers to gain market share benefited SK hynix by driving up demand for mobile memory chips.

As a result, DRAM and NAND shipments both broke the company's sales predictions, growing at 4 and 21 percent on year, respectively. First quarters are typically a low season for chipmakers.

The company forecast strong chip demand to persist through the year and warned that chip supply will become tighter later on in the year.

"Demand growth this year is stronger than expected," said Noh Jong-won, SK hynix chief financial officer, during a conference call on Wednesday.

"The company is preparing to ramp up production and consume inventory but client build forecasts continue to surpass our initial outlook. There's possibility that chip supply will become even tighter as we approach the year's second half."

To cope with the overall supply shortage in the semiconductor industry, SK hynix plans to partially use cash from what was reserved for next year's investments during the second half. But considering the time it takes for setting up equipment, the volume increase in chip production won't be realized until next year, Noh added.

SK hynix forecast 20 percent demand growth in DRAM chips this year, and mid-30 percent growth for NAND flash.

Clients were increasingly vying to increase memory inventory as the chip supply remains tight. Demand for computers and laptops are expected to remain strong, backed by higher demand from remote education and gaming.

Servers demand wasn't particularly strong, but that will change from the second quarter, SK said, as core players were increasing investments in new data centers. Demand increase will gain speed from summer, it added, as Intel's new central processing unit (CPU) for servers will create client demand to replace old servers and purchase new memory with larger capacity.

In terms of production, SK hynix said it will finish developing technology to produce "10-nm" DRAMs using extreme ultra violet (EUV) equipment and start mass production this year.

For NAND flash, SK plans to start mass production of the 176-layer NAND flash, building upon the 128-layer NAND Flash, which was popular among its clients after its 2020 release.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]