SK hynix has record high sales for a first quarter

Researchers at SK hynix's plant in Icheon, Gyeonggi, check semiconductor equipment. [SK HYNIX]

SK hynix reported record high revenue for a first quarter on Wednesday, driven by solid sales of chips used by data centers and a lower-than-expected decline in memory chip prices.

The chipmaker posted 12.16 trillion won ($9.6 billion) in revenue, up 43 percent over a year ago and higher than the market consensus of 11.8 trillion won tracked by FnGuide.

Its net and operating profits dipped below market expectations due primarily to an unexpected charge of 380 billion won set aside for replacing defective dynamic random access memory (DRAM) products.

Its net profit rose 100 percent in the first three months to 1.98 trillion won, short of the estimate at 2.3 trillion won.

Operating profit was 2.86 trillion won, up 116 percent on-year but lower than the consensus of 3 trillion won. That was the best first quarter operating profit since 2018.

The Icheon, Gyeonggi-based chip manufacturer attributed the good quarter to moderate price declines for memory chips and its acquisition of Intel’s NAND flash business, now rebranded as Solidigm.

“A smaller-than-expected fall in memory chip prices and revenues of Solidigm, which was incorporated as SK hynix’s subsidiary at the end of 2021, contributed to the earnings,” SK hynix said in a statement.

In a conference call Wednesday, the company acknowledged that demand for chips used in PCs and smartphones had been weak in the first quarter and will remain dull through the second, although it will likely rebound in the second half.

As for the charge of 380 billion won set aside for replacing defective DRAMs, SK hynix said it was a one-off.

“The results reflect the one-off provision that the company set aside after a performance weakness was found in some DRAM products sold previously,” the chipmaker explained in the statement.

“Following a thorough analysis of the reason and close consultation with the customer, SK hynix decided to start a compensation process including product exchange,” it said.

The company is on track to improve yield rates for its latest products including DRAM products based on the 10 nanometer node and 176-layer NAND flash memory chips. Development of other next-generation products is going well too, it said.

The company is considering building a new chip plant aside from existing plants in Icheon and Cheongju, and ground will be broken on a 120 trillion won complex in Yongin, Gyeonggi next month after three years of delays over licenses.

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