SK Hynix reported an operating loss for the second quarter of 2.88 trillion Korean won (equivalent to $2.24 billion) on Wednesday, which is lower than its first quarter loss of 3.4 trillion Korean won. The company cited a slow memory chip market but noted that artificial intelligence demand is driving a recovery. Revenue was up 44% compared to the first quarter, with a total of 7.30 trillion Korean won.
SK Hynix, a South Korean chipmaker, reported a much reduced second quarter operating loss of 2.88 trillion Korean won ($2.24 billion) Wednesday, compared to the 3.4 trillion won in the prior quarter and 4.2 trillion won from a year earlier. Refinitiv estimates, which take into account analysts more often accurate, expected the operating loss to be 2.7 trillion won. Revenue over the same period increased to 7.31 trillion Korean won, up 44% from the first quarter of 5.08 trillion Korean won. This was attributed to an increase in the use of AI and chatbot applications, such as ChatGPT, which have stimulated demand for memory chips. Outlining the company's strategy, SK Hynix CFO, Kim Woohyun, said in the earnings report that the "memory semiconductor market is seen to have entered the recovery phase." Shares of the chipmaker were down 1.23% on Wednesday morning in Asia, as investors were cautious with the news.
SK Hynix, the world's second largest producer of DRAM chips, announced in October that it would reduce its capital expenditure by 50% in 2023 to minimize production after reporting a 60% decrease in third-quarter profits as a result of diminished demand for memory chips. Both Samsung and Micron have also declared plans to cut their capital expenditure to decrease output. Smartphone and computer makers have wrestled with a surplus of memory chips after hoarding them during the pandemic-spurred surge. Since inflation has gone up, customers have been buying fewer of these items, causing prices of memory chips to decrease. Nevertheless, the business stated that sales of both DRAM and NAND flash memory products rose in the second quarter, and the higher average selling price of DRAM significantly contributed to revenue growth. They pointed out: "Although the cost for traditional DRAM products like DDR4 continued to decrease due to lack of interest in PCs and smartphones, the blended average selling price of DRAM increased in the quarter, due to increased sales of high-end products used for AI servers."
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Kim, a South Korean memory chip maker, anticipates that demand for AI memory will "remain resilient" and a "clearer impact of production reductions by memory firms" is likely. Kim further attested that the company's approach to combined investment remains steadfast, suggesting a reduction of at least 50% compared to 2022. Additionally, Sassine stated that chip prices should climb up by the later part of this year. He explained that current DRAM and NAND prices have been on the decline for a year and a half, but claimed the inventory should reach its lowest point in the third or fourth quarter. Moreover, Sassine noted that this situation will be beneficially for SK Hynix as the AI market evolves.
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