South Korean memory chip maker SK Hynix Inc said its first-quarter operating profit fell 65 percent from a year earlier to its lowest in 3 years, hit by faltering demand for consumer electronics such as smartphones. SK Hynix said in a regulatory filing its January-March operating profit came in at 562 billion won ($489 million), the lowest since the first quarter of 2013, in line with a 559 billion won profit tipped by a Thomson Reuters SmartEstimate.
Sluggish global economic growth has undercut appetite for gadgets such as smartphones and personal computers, dragging on prices of components like memory chips. Market researcher Gartner says global semiconductor revenue will fall 0.6 percent to $333 billion this year, in what would be only the second time the industry has had two straight years of declining sales. "It is difficult to expect a sharp recovery in demand in the immediate term for the DRAM market, but the launch of new smartphones and chips for servers will boost demand and gradually balance the supply-demand conditions," said the world's No. 2 maker of DRAM chips behind Samsung Electronics Co Ltd.
SK Hynix said first-quarter shipments of DRAM chips, used for temporary data storage, fell 3 percent from the previous three months, while their average price fell 14 percent. Meanwhile shipments of NAND chips, used for long-term data storage on products such as smartphones and servers, fell 11 percent and the average selling price fell 12 percent. However, the firm said it expects favourable NAND market conditions going forward, supported by the launch of new smartphones as well as growth in the high-end hard drive market.
First-quarter revenue for SK Hynix fell 24 percent from a year earlier to 3.7 trillion won, compared with a Thomson Reuters SmartEstimate of 3.8 trillion won. Shares of the memory chip maker are down 10.6 percent so far this year based on Monday's closing level, reflecting concern about the outlook for the semiconductor industry. Intel Corp, the world's top chipmaker, cut its full-year revenue forecast last week and said it would axe up to 12,000 jobs globally as it refocuses its business away from the declining personal computer industry it helped found. Intel expects the market for personal computers to decline by a high single-digit percentage rate this year, compared with a mid-single digit drop it expected previously.
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