SEOUL (AP) - Hynix Semiconductor Inc. said Thursday third-quarter profit plunged, falling 56 percent on a failure to achieve cost-cutting targets and amid a slump in memory chip prices.
Hynix Semiconductor, the world's second-largest memory chip maker, earned 168 billion won (US$182.9 million; euro128.8 million) in the three months ended Sept. 30, the company said in a regulatory filing.
Hynix posted net profit 384 billion won a year earlier.
The result, Hynix's second straight profit decline, was far worse than expected.
The average estimate of nine analysts surveyed by Dow Jones Newswires forecast that the company would post a net profit of 373.2 billion won (US$406.2 million; euro285.9 million).
Sales during the quarter rose 28 percent to 2.34 trillion won (US$2.55 billion; euro1.8 billion) from 1.82 trillion won a year earlier. Analysts expected sales of 2.47 trillion won (US$2.69 billion; euro1.89 billion).
James Kim, head of investor relations at Hynix, attributed the decline in net profit largely to a failure to achieve cost-cutting targets amid a transition to more advanced technology.
An 80 percent decline in prices for dynamic random access memory, or DRAM, chips in the third quarter from the same period last year also hurt profitability, he said.
The market for memory chips is subject to severe seasonal and cyclical price swings. Prices slumped in the quarter amid industry overproduction.
DRAM chips are used in personal computers to temporarily store information that is lost when the device is switched off. Icheon, South Korea-based Hynix also manufactures NAND flash memory chips used in devices like cameras and music players, which can retain data even if they are not powered.
Hynix competes with South Korean rival Samsung Electronics Co., the world leader in chip manufacturing.
Samsung last week reported its first profit gain in four quarters, bolstered by gains in non-chip businesses such as mobile phones and flat screen televisions.
Shares in Hynix, which released earnings results before the stock market opened, fell 2.24 percent to 26,200 won (US$29; euro20) in morning trading.
Hynix shares have declined about 28 percent his year.
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