SK Hynix more bullish than competitors on growing demand for memory chips

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The SK Hynix logo can be seen at its headquarters in Seongnam, South Korea on April 25, 2016. REUTERS / Kim Hong-Ji

SEOUL, Oct.26 (Reuters) – SK Hynix (000660.KS) predicts sustained demand for memory chips on Tuesday as it posted its highest quarterly operating profit in nearly three years thanks to rising prices, hitting a more bullish note than its rivals, notably Micron (MU.O).

SK Hynix and other chipmakers have been hit by slowing personal computer sales after an outbreak triggered by a pandemic, but the South Korean company said supply bottlenecks created a pent-up demand for PC chips that could boost sales next year.

“There has been a lot of uncertainty recently, but I think memory continues to do business at a level that offers good supply and predictability compared to other semiconductors,” said Kevin Noh, CFO from SK Hynix on a earnings conference call.

Intel (INTC.O) said earlier this month that a shortage of other chips is preventing its customers from shipping PCs and servers, echoing Micron’s comments. Read more

Business demand and changing hybrid work environments would also support demand for PC chips, said SK Hynix, which only tracks Samsung Electronics Co Ltd (005930.KS) in DRAM chips used for temporary storage in stores. PCs, servers and mobile devices.

A planned replacement cycle of equipment purchased by data centers during the 2017-2018 period will create demand for server chips, Hynix added.

SK Hynix shares rose 3% on Tuesday versus a 0.6% rise in the broad market (.KS11).

Operating profit reached 4.2 trillion won ($ 3.6 billion) in the July-September quarter, from 1.3 trillion won a year earlier, SK Hynix said.

It was its highest quarterly profit since the fourth quarter of 2018, and above a Refinitiv Smart estimate of 4.1 trillion won from 18 analysts.

Apple Inc’s (AAPL.O) supplier’s NAND business turned profitable for the first time since the fourth quarter of 2018, analysts said. NAND chips are used for permanent storage in mobile devices and servers.

SK Hynix said he expects Chinese regulators to approve its agreement to purchase Intel’s NAND business this year.

Analysts said the company has improved the performance of its 128-layer NAND flash chips that serve the data storage market, which will boost shipments.

SK Hynix said third-quarter revenue increased 45% year-over-year to a record 11.8 trillion won.

($ 1 = 1,177,2300 won)

Reporting by Joyce Lee and Heekyong Yang; Editing by Stephen Coates and Sayantani Ghosh

Our Standards: Thomson Reuters Trust Principles.


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