SK hynix's 2020 net profit exceeds expectations, growing twofold on year

Chipmaker SK hynix's net profit for 2020 outpaced analyst expectations to grow more than twofold on year to 4.75 trillion won ($4.24 billion), the company reported Friday.

Chipmaker SK hynix’s net profit for 2020 outpaced analyst expectations to grow more than twofold on year to 4.76 trillion won ($4.25 billion), the company reported Friday.

Annual revenue grew 18 percent on year to 31.9 trillion won, while operating profit was 5 trillion won, up 84 percent on year.

Fourth-quarter performance was reported at 1.77-trillion-won net profit, making turnaround in the red from the same period last year. Quarterly revenue increased 15 percent on year to 8 trillion won while operating profit jumped almost fourfold to 965.9 billion won.

“As the global economy slowed down due to the Covid-19 pandemic, the memory market which started off with high expectations earlier in the year slowed down from the mid-year,” said Noh Jong-won, SK hynix executive vice president and head of corporate center, during a conference call on Friday.

“However, we were able to realize growth in both revenue and operating profit by focusing sales on our main products like the 1Z nanometer DRAM [dynamic random-access memory] chips and 128-layer NAND Flash.”

Noh added the company was able to see significant growth in market share of server DRAMs last year. In the NAND business, sales of solid-state drives (SSD) for data centers grew sixfold, greatly exceeding the chipmaker’s initial forecast. As a result, SK was able to take up a “notable portion” of the global SSD market last year which is notable considering the chipmaker’s NAND sales had been more dependent on mobile devices in the past.

The chipmaker also benefited from a demand hike of smartphones that started bounding up from the third quarter of 2020.

In 2021, SK hynix’s forecast was that demand for DRAM chips would increase as corporate clients resume investments in data centers and smartphones enter the 5G era. Client inventory for NAND chips currently remains high but the company expected the market trend to recover from the year’s second half.

In terms of growth, the chipmaker expected DRAM shipments to increase by around 20 percent next year and a 30-percent increase for NAND flash.

Investments in 2021 will be a little higher than last year’s 9.9 trillion won, as the company will remain “cautious” in this year’s business plan, given the persisting uncertainties in the global economy.

For the first time this year, SK hynix will adopt extreme ultraviolet lithography in its chipmaking process — the most state-of-art technology in the field of chip mass production — starting from 1a-class DRAM chips that come with 15-nanometer circuits. Its M16 plant in Icheon, Gyeonggi, will also start operation this year, possibly in June. The three–story facility is SK hynix’s largest production site yet and among the world’s largest chip factories, the company said.

In the foundry business, the chipmaker will relocate some of its facilities for eight-inch wafers this year to China. The relocation was initially planned to happen over a two-year period but SK decided to fast forward plans due to high demand.

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