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Hynix Profit Beats Estimates on Mobile Chip Demand

Hynix Semiconductor Inc.'s memory chips are displayed for a photograph in Seoul. Photographer: Seokyong Lee/Bloomberg
Hynix Semiconductor Inc.'s memory chips are displayed for a photograph in Seoul. Photographer: Seokyong Lee/Bloomberg

Oct. 28 (Bloomberg) -- Hynix Semiconductor Inc., the world’s second-largest maker of computer-memory chips, reported third-quarter profit that beat analysts’ estimates after sales of chips used in mobile devices increased.

Net income surged fourfold to a quarterly record of 1.06 trillion won ($940 million) from 246.3 billion won a year earlier, Ichon, South Korea-based Hynix said today. Analysts predicted 1 trillion won, based on the average of five estimates compiled by Bloomberg.

Demand for memory chips that go into smartphones and tablet computers helped boost earnings, offsetting lower prices as personal-computer sales slowed, the company said. Hynix’s profit may ease in the fourth quarter because of sliding chip prices, analysts including David Choi at KTB Securities Co. said.

“The most important factor for earnings is how much the average selling prices drop,” Choi said by telephone from Seoul. “The fourth-quarter earnings will likely be lower than the consensus.”

The chipmaker may post net income of 690 billion won in the three months ending December, according to the average of four analyst estimates. That would be 5.8 percent higher than the 652 billion won reported a year earlier.

Hynix fell 0.2 percent to 22,850 won at the close of trading on the Korea Exchange, after gaining as much as 2.4 percent. The benchmark Kospi index slipped 0.1 percent.

Lower Prices

“As uncertainties of global economies are still lingering, overall PC demand continues to be below traditional seasonal demand,” Chief Financial Officer Kim Min Chul said on a conference call. “Continuing strong demand from smartphones and tablet PCs allowed us to maintain relatively stable pricing for mobile DRAMs.”

Average selling prices of Hynix’s dynamic random access memory, or DRAM, chips, will probably fall 20 percent to 25 percent in the fourth quarter from the prior three-month period, Kim said.

Sales of chips used in devices other than personal computers accounted for about 60 percent of total sales, rising from about 55 percent in the second quarter, he said.

Operating profit, or sales minus the cost of goods sold and administrative expenses, surged almost fivefold to 1.01 trillion won in the quarter. Sales rose 53 percent to 3.25 trillion won. Analysts predicted profit of 946 billion won and revenue of 3.2 trillion won, according to the average of nine estimates.

DRAM, NAND

DRAM chips are used to store data temporarily to help devices run multiple programs at the same time. Hynix also makes NAND flash memory chips, which save songs and pictures in consumer gadgets such as smartphones and digital cameras.

The price of the benchmark 1-gigabit DRAM chip fell 13 percent in September, according to Taipei-based Dramexchange Technology Inc., operator of Asia’s largest spot market for semiconductors.

Texas Instruments Inc., the second-largest U.S. chipmaker, on Oct. 26 forecast fourth-quarter sales that missed some analyst estimates, citing slowing consumer-electronics spending.

ISuppli Corp., an El Segundo, California-based researcher, said Sept. 30 that global semiconductor sales this year will rise less than it previously forecast because of slowing consumer demand for some electronic devices, including PCs.

To contact the reporter on this story: Jun Yang in Seoul at jyang180@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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