SK Hynix Q4 profit surges four-fold on robust chip shipments

SK Hynix reported an operating profit of S$1.15 billion in October-December. PHOTO: REUTERS

SEOUL (REUTERS) - SK Hynix, the world's No.2 memory chip maker, posted a 298 per cent jump in fourth-quarter profit, ahead of expectations, as a better-than-expected rise in chip shipments offset lower chip prices and forecast solid demand this year.

For 2021, SK Hynix said demand for server and mobile DRAM products, which go into devices, will remain high as global companies invest in new data centers and due to brisk 5G smartphone shipments. But supplies are expected to fall short of demand as the industry will see limited supply increase, the company said on Friday (Jan 29).

In NAND memory chips that serve the data storage market, it expected the market to recover from the second half of the year, as customers use up inventory and start to ramp of their adoption of high-capacity chips.

The South Korean company, which counts Apple among its customers, reported an operating profit of 966 billion won (S$1.15 billion) in October-December, up from a low base of 242 billion won a year earlier.

That beat a Refinitiv Smartestimate for a 926 billion won profit. The Smartestimate, which gives more weight to consistently accurate analysts, was drawn from 20 analysts.

Fourth-quarter revenue rose 15 per cent to 8 trillion won.

SK Hynix said the average selling price for DRAM chips during the fourth quarter dropped 7 per cent while the average selling price for NAND chips fell 8 per cent.

The coronavirus pandemic and a global shift to remote work is driving demand for advanced chips to power premium devices.

Analysts expect further profit gains for SK Hynix this quarter on a rebound in chip prices, helped by investments in US data centres, brisk sales of Apple's iPhone 12 and new launches of 5G-capable smartphones.

The supply of DRAM chips in particular is tight due to the greater-than expected pickup in demand and under-investment in manufacturing facilities owned by Asian firms.

Larger rival Samsung Electronics on Thursday also forecast solid demand for chips this quarter, and expected DRAM prices to rebound in the first half of the year from mobile and server clients' demand.

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