SK hynix narrows Q3 losses by 38% on higher demand for high-performance chips

[Courtesy of SK hynix]

South Korean memory chipmaker SK hynix Inc. posted nearly 1.8 trillion won ($1.3 billion) in operating losses in the third quarter but it managed to narrow losses thanks to increased demand for high-bandwidth memory (HBM) and other high-performance chips.

SK hynix said in a regulatory filing on Thursday that it logged 1.79 trillion won in operating losses in the third quarter, falling into the red from an operating profit of 1.7 trillion won in the same period a year ago.

The operating loss was 12.1 percent higher than the market estimate of 1.59 trillion won compiled by Yonhap Infomax.

Operating margin stood at 20 percent.

Sales fell 17.5 percent on year to 9.66 trillion won in the July-September period. Net loss stood at 2.18 trillion won.

From the previous quarter, sales were up 24 percent and operating loss narrowed by 38 percent. The improvement came on robust sales of key products such as HBM3, high-capacity DDR5, and high-performance mobile DRAM chips.

SK hynix saw increased sales of both DRAM and NAND. The average selling price (ASP) of DRAM rose, resulting in a quarter-on-quarter increase in revenue.

“As market demand for our high-performance memory products continues to grow, our operating performance has continued to improve from the low point of the first quarter,” the company said. “Most importantly, our DRAM business, which was in the red in the first quarter of this year, turned positive for the second quarter in a row.”

By product, SK hynix saw its DRAM chip shipments increase by about 20 percent and its ASP by about 10 percent compared to the second quarter, driven by strong sales of products for high-performance servers such as AI.

NAND also saw an increase in shipments, especially in high-capacity mobile products and SSDs.

The prices of DRAM and NAND are expected to go up from the fourth quarter, leading to sharp recovery.

According to market research firm TrendForce, DRAM ASPs are projected to rise 3 to 8 percent in the fourth quarter.

“While there are still concerns about the NAND business, which is on a slower recovery than DRAM, memory inventory levels at customers have reached a normal range and suppliers are continuing to cut back, which is accelerating the depletion of distributed inventory,” said Kim Hyung-tae, an analyst at Shinhan Investment & Securities Co.

SK hynix – determined to continue growth trend – plans to increase investment in high-value flagship products such as HBM, DDR5, and LPDDR5.

SK hynix plans to shift its processes to focus on the fourth (1a) and fifth (1b) generations of 10-nanometer DRAM, while increasing investment in HBM and TSV.

TSV is an advanced packaging technology that drills thousands of microscopic holes in DRAM chips and connects the holes in the upper and lower chip layers with electrodes that penetrate vertically.

“With our globally leading products such as HBM and DDR5, we will create new markets that are different from the past, and strengthen our position as the number one provider of high-performance premium memory,” said Kim Woo-hyun, vice president and chief financial officer at SK hynix.