Hynix logs first quarterly profit in 2 years

(ATTN: RECASTS headline; ADDS more details from conference; UPDATES with closing
share price in para 4)
By Lee Youkyung
SEOUL, Oct. 23 (Yonhap) -- Hynix Semiconductor Inc., the world's No. 2 memory
chip maker, reported its first quarterly profit in two years on Friday, bolstered
by higher product prices.
The company reported strong profits for the third quarter on the back of market
expectations for a steep rise in computer memory chip prices coupled with higher
demand for computers.
As Hynix's rivals were slowly rebounding from tighter production, market watchers
said the earnings report reconfirmed their previous predictions that the gap
between the chip giant and second-tier chip makers will continue to widen as
Hynix turns profits into investments.
Net profit stood at 246.3 billion won (US$209 million) in the July-September
period, compared with a deficit of 1.67 trillion won a year earlier, the company
said in a regulatory filing Friday. The consolidated earnings undershot a market
consensus of 358.9 billion won.
Sales rose 15 percent from a year earlier to 2.12 trillion won in the third
quarter, with operating profit at 209.3 billion won, the company said.
Shares of Hynix closed at 18,750 won on the Seoul bourse Friday, down 0.27
percent from Thursday's close. The value of Hynix shares more than doubled since
January, compared with an about 40 percent rise in the benchmark KOSPI index.
Hynix said the good third-quarter performance was driven by a
faster-than-expected recovery in chip prices and better-than-expected increase in
computer shipments and cost-cutting efforts. Increased R&D investment last year
also contributed.
The price of dynamic random access memory (DRAM) chips rose 26 percent from the
previous quarter, and shipments climbed 12 percent, the company said.
The company expects a continued upturn in the global demand for computers next
year, with a continued tight supply in DDR3 and prices of NAND flash memory, used
for cameras and mobile phones, to rise until mid-2010.
"Growth in DRAM supply will not be big next year," Kim Jong-kap, chief executive
of Hynix, told investors at the conference. "Most memory chip makers will focus
on upgrading previous plants rather than investing in new plants, and our
investment will be also minimal."
But Kim said his firm is likely to ramp up production of 44-nano DRAM chips next
year.
Market analysts said the earnings report confirmed their previous forecast that
Hynix would have cash to invest in new technology next year, which would push the
South Korean company further ahead of its rivals that posted net losses.
Taiwan's top players, Nanya Technology and Inotera Memories, posted net losses in
the third quarter, limiting their ability to lift production capacity, analysts
said.
"Hynix's report affirmed the market expectation that the DRAM price hike will
continue," said Han Seung-hoon, an analyst at Korea Investment & Securities Co.
"As Taiwanese makers recently started producing new chips, their productivity
remains low and they will continue to face difficulty in increasing supply to
meet higher demands," he added.
Hynix's third-quarter profitability recovered to positive 10 percent from
negative 13 percent in the previous quarter, while Nanya and Inotera's
profitabilty came in at around negative 20 percent.
ylee@yna.co.kr
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