SK mulls easing production cuts amid improving demand

SK hynix CEO Kwak Noh-jung speaks during a media conference. [Courtesy of SK hynix]

SK hynix Inc., the world’s second-largest memory chipmaker, is considering changing its production cut strategy in the first quarter, according to its chief executive officer.

“There are signs of improvement in the DRAM market,” said SK hynix CEO Kwak Noh-jung on Monday, during a media conference held on the sidelines of Consumer Electronics Show (CES) 2024, the world’s largest consumer electronics and information technology exhibition, in Las Vegas, the United States. “We are considering a change in our production cut strategy in the first quarter.”

Kwak added that the South Korean company will “maximize production of products in high demand and adjust those in weaker demand.”

“Regarding changes in production cuts, there seems to be a need for a change to DRAM in the first quarter.”

Kwak added that “although the pace is slow, NAND is also moving away from its worst situation” and that “we will apply the same principle (as DRAM) in either the second or third quarter, depending on market conditions.”

Samsung Electronics Co., the world’s largest memory chipmaker, which announced its earnings guidance for the fourth quarter of 2023 on Tuesday, is also estimated to have seen an improvement in the performance of its Device Solutions (DS) division responsible for semiconductors.

The operating loss of the company’s DS division is estimated to have narrowed from 4.58 trillion won ($3.47 billion) in the first quarter of 2023 to around 2.2 trillion won in the fourth quarter.

In particular, DRAM is believed to have returned to profitability in the fourth quarter, with market analysts estimating the DRAM division’s profit at around 800 billion won.