SK Hynix Exceeds Estimates on Resilient Memory Demand

SK Hynix posted earnings that topped estimates, assuaging concerns about a slowdown in demand from smartphone makers, according to Bloomberg.

Shares rose after the chipmaker reported that operating profit climbed to 4.47 trillion won ($4.2 billion) in the three months ended in December, the company said in a statement. Sales were 9.03 trillion won.

The earnings growth comes after Hynix shares slipped from record highs amid growing concerns that demand for memory chips would become sluggish, while the South Korean currency strengthened the most in Asia against the dollar. Its fourth-quarter performance reinforces optimism that the slide may be temporary and that Asia’s second-largest memory chipmaker can reach record profit for a second straight year.

“Year 2018 began with a mix of optimism and worries in the outlook of the market,“ CFO Lee Myoung-young said in a call with investors. “Memory chips are essential in the changing technology paradigm and we expect their value to keep rising.“ Hynix maintains a operating profit margin of 49 percent and has a consolidated cash balance of 8.6 trillion won, Lee said.

Investment is going to increase this year from 10.3 trillion won last year even though the amount hasn’t been set, he said. The company expects chip shortages will continue and plans to match the demand in both DRAM and NAND, Lee said. Hynix is expecting the Intel chip flaw to increase demand for memory chips used in servers.

Hynix earns 12 percent of its revenue from Apple, whose outlook for iPhone X sales has been questioned by some analysts. Samsung Securities said last week that Apple may cut orders for the smartphone’s parts in the first half amid speculation of “sluggish sales.“

Hynix and Samsung together control more two thirds of the dynamic random-access memory market. Intel and Samsung also receive supplies from Hynix, which seeks to become the leader in the fast-growing NAND flash memory market after joining a Bain-led group chosen to take over Toshiba’s semiconductor unit.