SK Hynix Sees Improvement After Profit Drops to 3-Year Low

  • Second-quarter DRAM shipments to rise about 15 percent
  • Shares post biggest jump in three months on brighter outlook

SK Hynix Inc., an Apple Inc. supplier, predicted memory-chip shipments will start to improve after a dismal first quarter, when the company reported its lowest operating profit in three years on sluggish demand for smartphones and computers.

The chipmaker’s shares climbed 6 percent to 29,150 won at the close on Tuesday, the biggest jump since August 2015, after the company said it anticipates DRAM shipment growth of about 15 percent in the second quarter.

That could be a sign that demand for memory-chip prices will start to pick up, after sputtering growth in China and other markets hurt sales of electronics products from smartphones to personal computers. Prices for DDR3 4-gigabit dynamic random access chips averaged $1.81 in the latest period, compared with $3.42 a year earlier, according to data from inSpectrum Inc. DRAM chips, along with NAND flash memory, are used in smartphones, tablets, personal computers and game consoles.

"Based on the company’s outlook, investors are now thinking the company earnings will look prettier in the second quarter than what they had previously thought," Claire Kim, an analyst at Daishin Securities Co., said. "The company’s shipment growth forecast seems aggressive and that is setting a positive tone on the overall semiconductor industry, including its chief rival Samsung Electronics."

Still, Hynix’s operating income slumped 65 percent to 561.8 billion won ($489 million) in the three months ended March, the lowest since the first quarter of 2013, the Icheon, South Korea-based company said in a filing Tuesday. That compares with the 593.4 billion-won average of analyst estimates compiled by Bloomberg.

Hynix posted consolidated net income excluding minority interest of 444.2 billion won, compared with 1.3 trillion won a year earlier.

"We are anticipating more positive demand momentum around the second half," Joonho Kim, president and head of corporate support at SK Hynix, said during a conference call following the first-quarter results.

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