SK Hynix Profit Beats Estimates on Apple Devices, Weaker WonJungah Lee
SK Hynix Inc. first-quarter profit beat analyst estimates as a weaker South Korean won boosted sales at the supplier of memory chips to Apple Inc.
Net income, excluding minority interest, rose to 1.3 trillion won ($1.2 billion), the Icheon, South Korea-based company said Thursday. That compares with the 1.15 trillion-won average of 25 analysts’ estimates compiled by Bloomberg. The shares rose.
Demand for Apple’s iPhone 6 models with larger screens helped boost orders, offsetting a decline in semiconductor prices and seasonal weakness. A stronger dollar benefits the chipmaker as more than 90 percent of its revenue is settled in the U.S. currency, according to Lee Min Hee, an analyst at I’m Investment & Securities Co.
“Earnings will be even better in the second half as new iPhones are expected to use more advanced chips that will lead to higher margins,” Lee, who has a buy rating on SK Hynix, said before the earnings announcement.
Operating profit was 1.59 trillion won compared with the 1.45 trillion won average of analyst estimates compiled by Bloomberg.
Shares of SK Hynix rose 1.2 percent to 45,800 won at the close of trade in Seoul. The stock has fallen 4.1 percent this year, compared with a 13 percent gain in the benchmark Kospi index.
Capital spending for this year will be about 5.5 trillion won, up from a previous estimate of about 5.2 trillion won, because of weaker Korean currency against the dollar, Lee Myoung Young, head of finance division said at a conference call Thursday.
The world’s fourth-largest semiconductor maker expects prices for personal computer chips to recover in the second half due to supply constraints. Demand for mobile chips is expected to increase in the current quarter as suppliers shift more production to chips for smart devices rather than PCs.
Apple is SK Hynix’s second-largest customer, after Samsung Electronics Co., providing about 9 percent of its sales, according to data compiled by Bloomberg.
Apple, which sold 74.5 million iPhones in the fourth quarter, may have sold about 55 million units in the first quarter, according to Lee.