SK Hynix tips first-half pickup after sharp second-quarter profit drop

Reuters News
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Posted: Jul 25, 2016 10:12 PM

By Se Young Lee

SEOUL (Reuters) - South Korean memory chip maker SK Hynix Inc <000660.KS> on Tuesday tipped a strong pickup in DRAM memory chips for mobile devices in the second half after its second-quarter operating profit fell to its lowest in more than three years.

The world's No. 2 memory chip maker after Samsung Electronics Co Ltd <005930.KS> said key clients would launch new smartphone products, boosting a market which has been hurt by weak demand for consumer electronics.

"The third quarter is a time when demand from key clients for new smartphone products rises significantly, which will have a positive effect," SK Hynix said in a statement.

SK Hynix said in a regulatory filing its April-June profit was 453 billion won ($397 million), the lowest since the first quarter of 2013 and matching analysts' estimates from a Thomson Reuters StarMine SmartEstimate survey.

The chipmaker's shares were down 2.1 percent as of 0206 GMT, compared with a 0.2 percent rise for the broader market <.KS11>, briefly touching their lowest price since July 8.

Yuanta Securities analyst Lee Jae-yun said concerns about tougher competition amid speculation about a takeover of U.S. Micron Technology Inc <MU.O> was weighing on investor sentiment.

Micron earlier this month announced job cuts and other savings after guiding for weaker-than-expected fiscal third-quarter sales, underscoring the strains on the industry.

Sluggish global economic conditions are weighing on demand for products ranging from smartphones to personal computers, hurting prices for components such as chips.

SK Hynix said second-quarter shipments of DRAM chips, used for temporary data storage, rose 18 percent from January-March while average selling prices fell 11 percent.

Shipments for NAND chips, used for long-term data storage on products such as smartphones and computers, rose 52 percent and the average selling price fell 11 percent.

Second-quarter revenue SK Hynix fell 15 percent from a year earlier to 3.9 trillion won, compared with a Thomson Reuters StarMine SmartEstimate of 3.8 trillion won.

The impending launch of new premium smartphones from firms such as Apple Inc <AAPL.O> and Samsung Electronics could help chipmakers in the current quarter, however.

Researcher TrendForce said earlier this month contract prices for DRAM chips had stabilized in June and would rise by between 4 percent and 8 percent in the third quarter.

SK Hynix also said it would push to grow its memory sales for vehicles, focusing on high-end applications such as self-driving technologies.

(Reporting by Se Young Lee; Editing by Stephen Coates)