Memorychip maker SK Hynix Inc’s fourth-quarter earnings more than tripled after lockdowns and stay-at-home orders boosted demand for PCs and purchases from Chinese smartphone makers.
The supplier of silicon to Apple Inc struck a more optimistic tone than rival Samsung Electronics Co, which had a day earlier warned of weakness in its first quarter.
Hynix yesterday said that it expects the memory market to recover, but warned of uncertainty over disruptions to supply from the COVID-19 pandemic and a tightening in global chipmaking capacity.
“Demand this year is going to be much more positive than the supply side,” Hynix DRAM marketing vice president MS Park said. “Both the market and customers appear to be upwardly adjusting their outlook.”
Hynix’s operating profit rose to 965.9 billion won (US$863.95 billion) in the fourth quarter, beating the average estimate of 928 billion won, while revenue climbed about 15 percent to 7.97 trillion won.
While Hynix no longer supplies memory chips to Huawei Technologies Co (華為) because of US sanctions that took effect in September last year, Chinese smartphone makers including Oppo Mobile Telecommunications Corp (歐珀) and Xiaomi Corp (小米) are increasing orders.
Apple’s earnings for the holiday quarter jumped more than analysts expected on sales of the iPhone 12, its first device for 5G wireless networks. Demand for servers and gaming consoles is also rising which is likely to continue this year.
Hynix signaled that there might be shortages in the memorychip market, as demand growth for DRAM is likely to exceed supply because of increasing use in data-center servers and 5G smartphones.
The auto industry has been struggling with semiconductor shortages that have led to plant closures across the industry.
Hynix is expediting its two-year plan to relocate 8-inch foundry equipment from its M8 fab in Cheongju, South Korea, to its fab in Wuxi, China, to cut costs and address booming demand.
Hynix said that while capital spending this year would be more than last year, the extent would be limited, despite opening its M16 fabrication facility.
It is planning prudent spending given uncertainties in the market.
Bit growth, or the amount of memory produced, exceeded expectations in the fourth quarter thanks to stronger-than-expected demand, Hanwha Investment & Securities said in a research note.
Inventories recovered to a normal level toward the end of the year, a positive sign for chipmakers, Hanwha added.
Hynix peers, including Micron Technology Inc and Advanced Micro Devices Inc issued upbeat outlooks for the first quarter of this year, as demand is recovering for chips that go into PCs, automobiles and servers.
Samsung said that it expects the market for DRAM memory chips to rebound in the first half of this year, with solid sales for mobile and rebounding data-center demand.
DRAM prices are set to increase starting in the first quarter, as rising orders from mobile device makers bring inventories down, while producers tighten capacity, Yuanta Securities Co (元大證券) analyst Lee Jae-yun said.
“This means that the timing of a rebound has been brought forward by two to three months,” Lee said.
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