SK hynix, the world’s third-largest chipmaker by sales, is expected to see its operating profit more than halve during the first three months of this year, according to analyst reports Wednesday.

Korean investment firms predicted that the Korean chip company’s first quarter operating profit would be in a range of 512 billion won ($446 million) to 579 billion won.
 

The estimates are up to 60 percent lower than the company’s operating profit in the first quarter last year, at 1.59 trillion won.

They attributed the decline to the firm‘s heavy reliance on its two flagship products--DRAM and NAND Flash memory chips--and a widened technical gap with the industry’s leader Samsung Electronics. Intel of the U.S. is the second-largest semiconductor firm.

Samsung Electronics produces both memory chips and non-memory chips, including mobile application processors.

SK hynix, the world’s second-largest DRAM producer after Samsung, is said to have taken the brunt of the recent price drop of DRAM chips.

The price of a DRAM chip dropped from $4 in 2014 to $1.38 in March this year.

Micron of the U.S., the third runner in the global DRAM sector, saw its sales drop 30 percent year-on-year to $29.3 billion in the December-February period, posting an operating loss of $1 million mainly due to the decreasing price of DRAM.

On the technical front, SK hynix is lagging behind Samsung.

Samsung rolls out NAND Flash chips stacking 48 layers of cells and DRAM chips utilizing an 18 nanometer chip design technology. The SK Group affiliate produces NAND Flash chips with 36 layers of cells and 21-nanometer DRAM chips.

SK hynix chief executive Park Sung-wook said earlier this year that the company would mass produce 18-nanometer DRAM early next year.

Yoo Eui-hyung, an analyst from Dongbu Securities, said in an investment report, “SK hynix’s operating profit will drop 58.3 percent on-year to 2.2 trillion won this year.”

By Kim Young-won (wone0102@heraldcorp.com)