Investment plan

SK hynix posts record quarterly sales, but needs to revise its investment plan

The SK hynix logo is seen atop the company’s semiconductor plant in this aerial photograph taken over Icheon, Gyeonggi province, July 22, 2019. (Bloomberg-Yonhap)

SK hynix on Wednesday reported record quarterly sales of 13.81 trillion won ($10.6 billion) from April to June, but said it would review investment plans next year, citing economic uncertainties global markets and weakening market demand. The world’s second-largest memory chipmaker also saw its operating profit jump 47% from the previous quarter to 4.19 trillion won.

“Although DRAM product prices declined in the second quarter, NAND prices increased and overall sales volume increased, resulting in increased revenue,” an SK hynix official said.

The official said the continued strong dollar and the addition of Solidigm’s earnings were also positive factors. Solidigm, now a US subsidiary of SK hynix, was created following the South Korean chipmaker’s takeover of Intel’s NAND flash business unit in December last year.

The chipmaker said record second-quarter profits were significant as the numbers were hit amid a difficult business situation comprised of global inflation, the protracted conflict between Russia and Ukraine and lockdowns in parts of China. .

The company predicted that demand for memory semiconductors will slow in the second half of this year as shipments of computers and smartphones using memory chips are expected to decline from previous forecasts.

Demand for server memory chips – which are supplied to companies operating data centers – could also stagnate, as customers will first use chips they have already secured, according to SK hynix.

“Inventory levels are increasing among the memory chip industry and customers. It is inevitable to adjust next year’s (capital expenditure),” said Noh Jong-won, chief marketing officer of SK hynix, during the conference call.

“Consumer sentiment is contracting on inflation and growing worries about the economic recession, as companies visibly try to cut costs. Although the supply chain issue was gradually resolved in the first half , we are facing a real drop in demand in the second half of the year,” he added.

Earlier, SK hynix delayed its decision to invest 4 trillion won in building a new factory at its chip manufacturing campus in Cheongju, North Chungcheong Province, at a meeting of the board of directors held last month. Construction was originally scheduled to begin early next year and the plant was expected to be completed by 2025.

By Kan Hyeong-woo ([email protected])