SK hynix reports record revenue, though memory glut looms

SK hynix reported third quarter net profit of 3.3 trillion won ($2.8 billion), a 205.5 percent jump on year, on strong memory chip prices.

Researchers at an SK hynix plant in Icheon, Gyeonggi, check chip manufacturing processes. [SK HYNIX]

SK hynix reported third quarter net profit of 3.3 trillion won ($2.8 billion), a 205.7 percent jump on year, on strong memory chip prices.

“The biggest factor is demand for memory chips used for smartphones and servers, a trend that led to higher prices,” the chipmaker said in a statement.

Analysts warn that the prices of dynamic random access memory (DRAM) and NAND flash memory peaked in the second and third quarter and could start to soften in the final quarter of the year.

Sales hit a record 11.8 trillion won in the July-to-September period, up 45 percent on year.

The company said that it was able to improve yield rates for its NAND business by employing newer manufacturing techniques.

SK hynix expects that the NAND segment could receive a boost when the supplier completes the acquisition of Intel’s NAND memory and storage business this year.

“SK hynix will rearrange its product portfolio in a way that creates synergies with each other, while achieving economies of scale,” said Noh Jong-won, SK hynix's chief financial officer in the statement.

“The company will also strengthen the base of research and development with an aim of growing into an undisputed memory chip leader,” the CFO said.

The markets are growing cautious on the prospects for memory chips, as their prices are expected to drop in the fourth quarter. The bearish projections have dampened investor sentiment towards the chip stocks, with share prices of Samsung Electronics and SK hynix declining.

Analysts say that high memory-chip inventories as a result of stockpiling will translate into lower demand. A slowdown in the manufacturing of cars and electronic devices, a consequence of the global shortage of processor chips, could also contribute to a glut of DRAMs, which have not been in short supply.

“Contract prices of NAND Flash products are expected to undergo a marginal drop of zero to five percent quarter on quarter in 4Q21 as demand slows,” market tracker TrendForce wrote in its latest report, released last week.

SK hynix jumped 2 percent to close at 102,000 won in trading Tuesday.

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