Hynix Reports Wider-Than-Estimated Loss as Chip Prices Fall
Hynix Semiconductor Inc. (000660), the world’s second-largest maker of computer-memory chips, posted a wider-than-estimated third-quarter loss after chip prices dropped and the South Korean currency weakened.
The net loss was 562.6 billion won ($496 million), compared with a profit of 1.04 trillion won a year earlier, Ichon, South Korea-based Hynix said today in a statement. Analysts expected a loss of 398.5 billion won, according to the median of four estimates in a survey by Bloomberg News.
Hynix and other makers of memory chips known as DRAM have suffered from weakening demand as makers of traditional PCs cut back on purchases, with consumers flocking to mobile devices such as Apple Inc.’s iPad. The South Korean company, on sale by former creditors, is seeking to boost sales with different types of memory used in new mobile devices, while trying to reduce production costs by using advanced technologies.
“DRAM prices have fallen so much, and there’s a limit to what they can do no matter how much they try to cut costs and improve their product mix,” Park Hyun, a Seoul-based analyst at Tong Yang Securities Inc., said before today’s announcement.
A 250 billion won foreign-exchange loss caused by a weaker South Korean won also contributed to the loss, said Hynix, which has $4.4 billion worth of debts in foreign currencies.
Hynix fell 2.1 percent to 23,650 won as of 12:22 p.m. in Seoul, while the benchmark Kospi index gained 1 percent.
The company’s operating loss, or sales minus the cost of goods sold and administrative costs, was 276.8 billion won on sales of 2.29 trillion won.
Weakening demand for computer memory chips also hurt Micron Technology Inc. (MU), the largest U.S. maker of the product. On Sept. 29, Micron reported a net loss of $135 million for the fiscal fourth quarter.
The price of the benchmark DDR3 2-gigabit DRAM chip has slumped more than 70 percent in the past 12 months, according to data from Taipei-based Dramexchange Technology Inc., operator of Asia’s largest spot market for semiconductors.
DRAM chips are used to store data temporarily to help devices run multiple programs at the same time.
Chip prices may start climbing in November as PC makers boost purchases to take advantage of low costs, Park Hyun, a Seoul-based analyst at Tong Yang Securities Inc., wrote in an Oct. 14 report.
To make up for slowing demand for memory for PCs, chip makers are turning to smartphone manufacturers. Shipments of smartphone DRAM will probably more than double this year from 2010, according to researcher IHS iSuppli.
Global personal-computer shipments will rise 3.8 percent to 364 million units in 2011, compared with an earlier projection of 9.3 percent, research firm Gartner Inc. said on Sept. 8. Shipments will probably increase 10.9 percent in 2012, the Stamford, Connecticut-based company said.
Chips for non-PC devices such as mobile phones and servers account for about 70 percent of Hynix’s overall product line-up, and the company will maintain the portion, Hynix said today.
The company is also seeking to boost sales of so-called NAND flash memory, used for storage in devices such as Apple Inc.’s iPad. Hynix expects shipments of its NAND-flash memory chips to more than double in the fourth quarter from a year ago, the chipmaker said today.