SK Hynix, the world’s second-largest memory chipmaker, on Thursday reported record-breaking quarterly earnings on the back of timely investment and sanguine market conditions.

Sales reached 3.93 trillion won ($35.2 billion) while the operating profit stood at 1.11 trillion won. Both were an all-time high for the company. Net profit swung to the black from a 53 billion won deficit in the same period last year.

“Technology migration, combined with cost-cutting measures and improved market conditions have resulted in an operating profit that is the largest ever in the company’s history,” said Kim Joon-ho, president of SK Hynix’s corporate center.

SK Hynix even beat the market consensus, which had put operating profit at 975 billion won.

High demand for DRAM and NAND flash memory driven by a dearth of new mobile devices played a significant role in the exceptional quarterly performance, experts said.

“DRAM prices were driven upwards on low supply and high demand. Prices remain high this year, with demand unlikely to fluctuate due to the growing market share of mid and low-range phones,” said Do Hyun-woo of Mirae Asset Securities.

Particularly, the rising demand for low-caliber smartphones from areas such as China was expected to continue fuel the DRAM prices. DRAM shipments from SK Hynix in the April to June period rose 20 percent on-quarter, while NAND flash shipments increased by 29 percent compared to the first quarter.

SK Hynix has been manifesting solid growth since SK Group took over last year. Strategic and well-timed investment was one of the most necessary factors behind the success story, as SK last year invested up to 3.85 trillion won into the chipmaker.

The figure reflects a 10 percent rise from the 2011, and cuts a stark contrast with how the semiconductor sector as a whole slashed investment by over 10 percent during the same period, according to Gartner figures.

The chipmaker expected its third quarter performance to stay solid, forecasting 20 percent growth for its NAND flash during the July to September period this year.

The company also reiterated previously reported plans to completely dedicate its M12 production line for NAND, instead of combining it with DRAM production, and for increasing the portion of high-end 20-nanometer DRAM to account for over half of the company’s product portfolio in the third quarter.

SK Hynix was further buoyed by the quarterly results by the fact that it signed a costly cross-license deal with U.S.-based chip designer Rambus earlier this year that had “little impact” on the operating profit.

The chipmaker’s shares rose slightly by 0.18 percent Thursday to close at 28,600 won. 


By Kim Ji-hyun and Kim Young-won
(jemmie@heraldcorp.com)
(wone0102@heraldcorp.com)