SK hynix matches Q3 earnings with its heyday in 2018, upbeat about Q4

(Updated with conference call comments)

SK hynix Inc. in the third quarter delivered near best income and even better revenue than its heyday in 2018 from a super cycle in memory chips on strong demand and yield from next-generation wafer lines.

The South Korean memory chip giant disclosed Tuesday that its operating income for the third quarter ended on September 30, 2021 jumped 54.8 percent on quarter and 220.4 percent on year to 4.2 trillion won ($3.6 billion). The result is the second quarterly best after 4.4 trillion won recorded in the fourth quarter of 2018.

Sales totaled quarterly high of 11.8 trillion won, up 14.4 percent from the previous quarter and 45.2 percent from a year ago.

The results beat the market consensus of 4.07 trillion won operating income and 11.7 trillion won sales, compiled by local market tracker FnGuide.

Operating margin came at 35 percent, improving 9 points from previous quarter and 19 points on year.

On Tuesday, shares of SK hynix gained 2 percent to close at 102,000 won in Seoul.

The company attributed its record-breaking results to growth in memory chip demand for server and smartphone applications, leading to higher product prices and output.

DRAM chip’s average selling price rose nearly 10 percent and NAND flash shipment grew over 20 percent to exceed the target, explained Noh Jong-won, SK hynix’s chief financial officer during the earnings conference call.

Yields for mainstream DRAM and NAND improved through processing from high-yield and cost-effective 10-nano and 128-layer flash processing lines.

[Photo by SK hynix Inc.]

NAND flash business swung to profit in the third quarter. The business has been in the red since the fourth quarter in 2018.

The company anticipates to do better in NAND business in the final quarter of this year with shipments jumping nearly 60 percent.

SK hynix said it will complete its acquisition of Intel’s NAND and SSD business by the end of this year. It still needs approval from China, out of eight countries, but expects to get the green light within the year, said Noh.

The company maintained sanguine outlook despite concerns for softening trend in its mainstay DRAM.

“Despite the concerns over recent global supply chain disruptions, the remarkable quarterly performance signals that the semiconductor memory industry is continuing its growth momentum,” said Noh in the earnings press release.

SK hynix will also keep to investing 30 percent of its revenue in facilities expansion, said Noh, adding that the company is preparing to move up its capex schedule for next year by at least two months to better respond to market uncertainties.

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