HP to IBM May Be First Customers for New SK Hynix Chips

SK Hynix Inc. (000660), the world’s second-largest maker of memory chips, said its newest semiconductors for mobile devices and laptops will be available first to Hewlett-Packard Co. (HPQ) and International Business Machines Corp. (IBM)

Toshiba Corp. (6502) also may be among the initial customers since the three companies partner with SK Hynix on the development of next-generation chips, Lee Jung Hoon, head of the Korean company’s Advanced Device & Process Integration division, said in an interview. The chips would be offered to those companies starting in 2015 at the earliest, he said.

SK Hynix, a supplier to Apple Inc., is focusing on more advanced technologies to boost earnings as stalling demand for personal computers depresses prices for cheaper chips. The Icheon, South Korea-based company teamed with U.S. computer makers to develop resistive random access memory, or ReRam, which may replace the flash memory used in smartphones and tablet computers.

“Whether it will be mass-produced or not will depend on its cost-competitiveness in the market,” Lee said. “It will only happen in 2015 at the earliest.”

The company has been unprofitable in four of the past five years as chip prices slump. SK Hynix said April 24 it posted first-quarter profit of 178.7 billion won ($154 million) in the three months ended March after losing 271 billion won a year earlier.

DRAM Prices

SK Hynix shares fell 0.8 percent to 29,500 won at the close in Seoul today while the benchmark Kospi index fell 1 percent. The stock has gained 16 percent this year, compared with an 11 percent decline in the Kospi.

The price of the benchmark DDR3 2-gigabit DRAM rose to $1.93 yesterday from $1.02 a year earlier, according to TrendForce Corp.’s DRAMeXchange, Asia’s largest market for the components.

SK Hynix teamed with Toshiba in 2011 to jointly develop the next-generation dynamic random access memory or, DRAM, chips that are mostly used for PCs. It also struck a technology license agreement with IBM in June 2012 for the development of new technology.

“PC demand is falling these days, they have to shift their focus to mobile chips,” said Nam Dae Jong, an analyst at Hana Daetoo Securities Co. in Seoul.

To contact the reporter on this story: Jungah Lee in Seoul at jlee1361@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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