SK hynix posts record high Q1 earnings as DRAM prices surge

Memory manufacturer SK Hynix has just announced that it will start manufacturing the first 8 GB chips of GDDR6 GRAM memory at its 20 nm node in order to begin marketing it to a customer (it has not revealed its name) next year 2018. The results translated to an operating margin of 39.2 percent, the second-highest performance after the second quarter of 2004.

From a year earlier, the chipmaker saw a whopping 339 percent jump in operating profit.

SK Hynix also notes that the GDDR6 memory is regarded as one of necessary memory solutions in growing industries like AI (Artificial Intelligence), VR (Virtual Reality), self-driving cars, and high-definition displays aiming for 4K+ resolutions.

SK Hynix' DRAM bit shipments decreased 5% sequentially in the first quarter of 2017, but ASPs climbed 24% on quarter.

SK hynix posts record high Q1 earnings as DRAM prices surge

According to market researcher DRAMExchange, a fixed price of 4-Gigabit DDR4 for average PCs stood at $2.75 as of March, up from $1.31 last June. The price of NAND flash memory also surged by 59 percent to $3.56 from $2.24 over the cited period.

Net profit came to 1.89 trillion won (US$1.66 billion), compared to 448 billion won posted a year earlier, the company said in a regulatory filing.

"The company is expected to have sharp improvements in the sales-to-operating profit ratio of over 40 percent in the upcoming quarters", said Kwon Sung-ryul, an analyst at Dongbu Securities. The company attributed the shipment drop to continued tight supply of the memory caused by "low inventory level at the beginning of the year and limited supply growth".

However, the extent of the shortage is likely to ease toward the end of the year, stabilising pricing, the company said in a conference call. DRAM chips like the kind SK Hynix produces are often used in servers at data centers. The company is bidding for the world's second largest flash memory division of Toshiba catch up with Samsung Electronics and keep ahead in the flash memory which is in explosive demand to power mobile and smart devices and vehicles and as reliable alternative to computer hard disc drive.

  • Carolyn Briggs