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Hynix Posts Sharp Loss on Plunging DRAM Prices

Hynix Semiconductor, the world's No. 2 memory chipmaker, posted on Friday a steep net loss, its first in 4-½ years, as memory chip prices went into a tailspin, and the outlook for the sector remains bleak in the near term.

Hynix and its overseas subsidiaries posted a 465 billion won (US$492.8 million) net loss for the quarter to Dec. 31, compared to a record 1 trillion won profit booked a year ago and a 319.7 billion won loss forecast by nine analysts polled by Reuters Estimates. The loss is the company's first since the second quarter of 2003.

The company posted an operating loss of 318 billion won for the fourth quarter, in line with the 300 billion won loss forecast.

Sales from Hynix and its overseas units in the fourth quarter were 1.85 trillion won, against expectations of 1.9 trillion won and last year's 2.61 trillion.

Prospects for Hynix and bigger rival Samsung Electronics are grim until at least the middle of the year as the positive effects of capital investment cuts by major chip makers will take a few months to be felt.

After surviving a disastrous 2007 during which some of their flagship products fell more than 90 percent, makers of dynamic random access memory (DRAM) chips are betting on a market rebound in the second quarter of this year.

The outlook for chip makers is further clouded by steep price falls expected in the first half in NAND flash chips, widely used in electronic gadgets such as digital cameras and music players. NAND chip prices are seen falling more than 35 percent just in the first quarter of 2008.

Hynix said average prices of DRAM chips fell 35 percent in the fourth quarter, after rising 3 percent in the previous period, while shipments rose 7 percent from 17 percent in the third quarter.

Hynix also said average prices of NAND flash chips fell 34 percent after falling 6 percent in the third quarter.

Hynix and its overseas units reported a full-year net profit of 361 billion won for 2007, a steep drop from the 2 trillion won profit it posted in 2006.

Reflecting continued investor concerns over the memory market, Hynix shares fell 17 percent in the fourth quarter, against the KOSPI's 2.5 percent drop.

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