Weak memory chip prices pull down Hynix earnings

  • Business
  • Thursday, 05 May 2005

SEOUL: South Korea's Hynix Semiconductor Inc reported a 10% fall in quarterly profit yesterday, hit by weak memory chip prices. 

Hynix is expected to fare better in the second half as seasonal demand lifts sales and manufacturing bottlenecks limit supply, helping chip prices recover. 

Lim Chang-gue, a fund manager at Samsung Investment Trust Management, sees DRAM prices bottoming out in the second quarter. 

“I'm not sure if earnings in the second quarter will improve significantly, but they will definitely improve by the second half,” said Lim, noting that Hynix was also moving into potentially more lucrative flash chips. 

Dynamic random access memory (DRAM) chips are Hynix's mainstay products and are mainly used to run computers, while flash chips are used for gadgets such as music players and digital cameras. 

Hynix earned 316.5 billion won (US$317.4mil) in net profit for the quarter to March, beating analysts' mean forecasts for 304.9 billion. 

Employees walk past a logo of Hynix Semiconductor at the company's headquarters in Seoul. - AFPpic

The profit compared with 351 billion won a year ago and 186 billion won in the previous quarter. 

“Strong sales of DRAM chips and improving profitability in flash memory chips helped offset negative factors such as a rise in the won and raw material prices,” Hynix said in a statement. 

Sales were 1.28 trillion won versus 1.3 trillion a year ago. 

Hynix is expected to report a 1.05 trillion won net profit this year, according to Reuters Estimates, down 38% from 1.7 trillion a year ago when the company sold non-core operations, which generated roughly a fifth of total revenues, to a Citigroup Inc fund for US$830mil. – Reuters

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