Hynix has reported a slowing down of growth in the memory chip profits as it posted its first drop in quarterly profit in two years, casting doubt on medium-term revenue growth.
SK Hynix President Kim Joon-ho told analysts that the problem was a change in product mix and a transition to more complex production technology will crimp third-quarter shipments growth for the key DRAM business. Analysts are concerned that DRAM shipments growth will be increasingly limited in the latter half of the year, given the technology migration issues, which would lead to slower top-line growth. But Hong said such concerns were overblown, as limited shipments growth would help keep supply tight and support chip prices.
Hynix posted an operating profit of $1.07 billion for the April-June period which is not to be sneezed at. But that result was 2.7 percent below the same quarter a year earlier. The other problem is the rise in the value of the won, which toll on revenue, which fell 0.2 percent compared with the previous corresponding period. The currency on average gained more than 9 percent against the dollar during the April-June quarter from a year ago.
President Kim said growth in shipments of DRAM chips, mainly used in personal computers and servers, would slow to a mid-single-digit percent rate in the third quarter, from 13 percent in the April-June period. Shipments of NAND chips, typically used in mobile devices, would slow to a high 20 percent rate from 54 percent.
He said that DRAM market trends will remain favorable due to better-than-expected demand for personal computers as well as data centre-related server demand.
“The launch of new mobile products by major companies and the development of LTE-related demand in China will likely keep demand-side conditions firm,” he added.
Analysts played down concerns of a supply glut arising from the company’s plans for capital investment in the second half of 2015, and expected short-term earnings to remain firm.
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