- Weakening demand for smartphones, computers hitting demand
- Benchmark memory prices about half their level a year ago
SK Hynix Inc., a supplier to Apple Inc., posted fourth-quarter profit that missed analysts’ estimates as sluggish demand for smartphones and personal computers exacerbated declining memory chip prices.
Operating income fell to 988.9 billion won ($828 million) in the three months ended December, the Icheon, South Korea-based company said Tuesday. That compares with the 1.04 trillion-won average of analyst estimates compiled by Bloomberg and is the smallest in two years.
China’s slowing economy and weakening demand from smartphone customers is crimping demand for components and accelerating price declines for memory chips. Prices for DDR3 4-gigabit dynamic random access memory, DRAM, chips averaged $1.93 in the quarter, compared with $3.77 a year earlier, according to data from inSpectrum Inc.
“The market expectations have been lowered recently, so overall, the results weren’t as bad as feared,” said Jay Yoo, a Seoul-based analyst at Korea Investment & Securities Co. “Still, no sharp turnaround in demand is expected in the short term and the market will have to maintain its conservative outlook for the year.”
Shares of SK Hynix slipped 0.5 percent to close Tuesday at 27,850 won in Seoul. Including Tuesday’s fall, the stock has dropped 9.4 percent this year compared with a 4.6 percent decline in the benchmark Kospi index.
Apple, which accounts for 11 percent of Hynix’s sales, is due to report earnings this week.
There have been signs suggesting that iPhone sales may be slowing. According to several analysts, Apple has cut orders to its suppliers for phone components, indicating the Cupertino, California-based company may not sell as many handsets in early 2016 as originally anticipated.
SK Hynix’s net income excluding minority interest was 870.3 billion won, beating the 808.6 billion won average of analyst estimates.
“The PC market demand recovery will be limited while the global economic uncertainty will persist into the first quarter of this year,” Kim Joon Ho, SK Hynix’s President and Head of Corporate Support said on a conference call. “However, demand for high density mobile DRAM is expected to continue grow with the launch of major high-end smartphones.”