The Korea Herald


Hynix posts solid profit despite fall in prices of chips

By Cho Ji-hyun

Published : April 28, 2011 - 18:49

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Hynix Semiconductor Inc., the world’s second-largest computer memory chipmaker, announced Thursday it posted 2.79 trillion won in sales and 323 billion won in operating profit for the first quarter, slightly up from the previous quarter largely due to an increase in shipping.

The figures indicate that the total sales and operating profit rose 1.5 percent and 9.9 percent, respectively, in the first quarter compared to the fourth quarter of last year, company officials said.

However, total sales and operating profit fell 1 percent and 56 percent, respectively, compared to the same period last year.

Although the average selling price of its main item dynamic access memory chips (DRAM) dropped 13 percent from January to March, the company’s quarterly net income rose by 812 percent to 274 billion won, from 30 billion won in the previous quarter.

The result stems from the increase of DRAM bit shipment in both the non-PC and PC sectors ― up 15 percent ― and the rise of NAND Flash bit shipment, which also climbed 15 percent even with the flat selling price.

Of the sales, the portion of non-PC DRAMs, such as mobile DRAM which went up with the increasing number of smart gadgets owners, took up 70 percent of total DRAM sales. It will be further raised up to the mid-70 percent range in the second quarter, said company officials.

“I think it’s very difficult to forecast the mobile DRAM supply demand for next year, but considering the growth rate for smartphones and tablet PCs, it will be huge,” said Kim Ji-bum, chief marketing officer at Hynix.

Acknowledging that mobile DRAM has already become a standard product, he said it would gain more ground to soon become the main memory chip.

As the world’s No. 2 computer chip producer continues to bring solid profit reports, a possible merger with the country’s larger firms remains to be an attention-grabbing issue.

Hynix’s creditors held a meeting on Tuesday and agreed to resume the merger and acquisition process since it was put to a stop last February.

A detailed plan and an announcement involving the merger and acquisition could be released as early as late May after conducting due diligence, they said.

Some of the companies that are currently on the creditors’ tentative list are SK Group, LG Electronics and Hyosung.

Analysts say that Hynix’s solid quarterly performance despite the market downturn may put the company in a good position for a sell-out.

“In the past, the company’s profit was in the red at times of sluggish economy, but it started showing improvements from the second quarter of last year,” said Lee Ka-keun, a senior analyst at Hana Daetoo Securities Co., adding that it could be a positive sign for the merger.

Hynix made attempts to find a new owner early last year and in 2009, however, no qualifying firms took part in the effort, especially with the market turning in favor of the semiconductor industry.

By Cho Ji-hyun (