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SK hynix’s third-quarter earnings rose 73% to 6.5 trillion won

South Koreas SK Hynix announced third-quarter earnings on Thursday. Despite weak chip prices, the company‘s earnings exceeded expectations due to seasonal sales growth and strong server demand for mobile devices.
SK hynix, the world‘s second-largest memory chip maker, said its July-September operating profit rose 73% year-on-year to 6.5 trillion won ($5.7 billion). According to data giant Refinitiv, actual earnings in the third quarter exceeded the average forecast of 19 analysts 6.3 trillion won. Compared with the same period of last year, SK Hynix sales increased by 41%, reaching a record high of 11.4 trillion won.
Looking ahead, the company said that Chinese consumers are increasingly demanding low-end smartphone high-density chips, which will help offset the slowdown in DRAM chip price growth and the negative impact of falling NAND flash chip prices.
However, macroeconomic factors such as global trade conflicts will exacerbate the uncertainty in the DRAM market.
Analysts said that the decline in DRAM memory chip prices means that the market’s two-year super-rising cycle is over, and the chip market is in short supply and the global chip maker’s profits are soaring.
Lee Wang-jin, an analyst at investment firm Taurus Investment and Securities, said that the price of DRAM memory chips has risen sharply since 2016, an increase of about 25% but is expected to fall by about 5% in the fourth quarter. The DRAM memory chip mainly handles a large amount of data streams generated by the mining equipment of the server, the game PC, and the cryptocurrency.
Lee Wang-jin also said that the average price of NAND flash chips will fall by about 9% in the fourth quarter, while NAND flash chips are mainly used in smartphones and memory cards. The market will only appear in the cold winter period in the first half of next year, but as the chip manufacturers announce their investment plans in the beginning of next year, the market trend will gradually become clear.
Refinitiv’s data shows that SK hynix’s operating profit will decline from the second quarter of 2019.

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