SK Hynix Profit Misses Estimates

SK Hynix announced a 50 percent increase in dividends along with plans to cut investment if necessary, helping to bolster its stock even after reporting lower-than-projected sales and profit, according to Bloomberg.

Weaker demand for memory chips resulted in operating income of 4.4 trillion won ($3.9 billion) in the three months ended December, short of the 5.1 trillion-won average of analysts’ estimates. Sales also fell short of expectations. The increase in the annual dividend to 1,500 won from 1,000 won helped fuel a gain of as much as 3.7 percent in the shares.

While the results reflect sluggish demand for mobile-phone chips and the implications of the U.S.-China trade war, the Icheon, South Korea-based manufacturer expressed hope for improvement in the second half of this year when server companies go ahead with further expansion. The supplier to Apple also said its capital expenditures will decline this year and that the company may consider an additional cut depending on demand.

Hynix added in its conference call that fewer shipments of smartphones appear to be “inevitable“ this year. Apple cut its sales forecast earlier this month and data centers are readjusting their expansion plans amid continued trade frictions between the U.S. and China. Hynix sales rely heavily on the world’s two largest economies.

Earlier this month, larger rival Samsung released preliminary earnings that missed estimates in the same quarter. The world’s largest chipmaker plans to explain its results to investors at the end of this month.

Apple is Hynix’s largest customer, providing about 13 percent of its sales. 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 chip-making unit.