Hynix profit falls on chip prices

South Korea's Hynix Semiconductor Inc reported a 10 percent fall in quarterly profits on May 04, hit by weak memory chip prices, but a brighter outlook lifted shares in the world's No 2 memory chip maker. Hynix is expected to fare better in the second half as seasonal demand lifts sales and manufacturing bottlenecks limit supply, helping chip prices recover. Lim Chang-gue, a fund manager at Samsung Investment Trust Management, sees DRAM prices bottoming out in the second quarter. Dynamic random access memory (DRAM) chips are Hynix's mainstay products and are mainly used to run computers, while flash chips are used for gadgets such as music players and digital cameras.
Hynix earned 316.5 billion won ($317.4 million) net profit for the quarter to March, beating analysts' mean forecast of 304.9 billion.
The profit compared with 351 billion won a year ago and 186 billion won in the previous quarter.
"Strong sales of DRAM chips and improving profitability in flash memory chips helped offset negative factors such as a rise in the won and raw material prices," Hynix said in a statement.
Sales were 1.28 trillion won versus 1.3 trillion a year ago.
Hynix is expected to report a 1.05 trillion won net profit this year, according to Reuters Estimates, down 38 percent from 1.7 trillion a year ago when the company sold non-core operations that generated roughly a fifth of total revenues to a Citigroup Inc fund for $830 million.
Hynix shares were up 3.3 percent at 12,600 won by 0503 GMT. Its shares rose 12 percent in the first quarter, beating a 7.8 percent rise in the broader market, and have more than doubled from last year, propelled by expectations of a strong turnaround.
Creditors, which own a combined 81 percent of Hynix, agreed in late April to finish a debt workout scheme ahead of the end-2006 schedule and to sell a 24 percent stake in Hynix, valued at around 1.4 trillion won at current market prices.
The early end of the workout programme and possible stake sale have underscored signs that Hynix has improved to a point where it could take back management from creditors, analysts have said.
Its operations have been improving since several bail-outs worth billions of dollars saved it from collapse amid the chip industry's worst downturn in 2000-2001.