Hynix Posts Heavy Quarter Loss on Writeoffs, Downturn

Hynix Semiconductor, the world's No. 2 memory chip maker, reported its fourth straight quarterly loss on Thursday as weak chip prices and write-off costs sank its bottom line. 

South Korea-based Hynix, which trails home rival Samsung Electronics, is struggling with a long-running slump in the cash-starved memory chip industry while the spiraling global financial crisis has dried up consumer demand for computers and other electronics.

The future looks grim as prices continue to drop to well below cash costs, while a recovery is not forecast before the second quarter of 2009 at the earliest. 

Hynix posted a 1.65 trillion won ($1.19 billion) net loss for the quarter to Sept. 30, compared with a 168 billion won profit booked a year ago. 

The result was much worse than a 1.04 trillion won loss forecast by eight analysts polled by Reuters. Hynix factored in the costs of closing its unprofitable older production lines in the third quarter. 

The figure also reflected the burden of foreign currency  moves, as the won's value against the dollar at end-September was 24 percent lower than a year ago.

The third-quarter loss came on the heels of the second quarter's 708 billion won shortfall.

Operating loss on a parent basis was 463 billion won, larger than the second quarter's 183 billion won and more than a consensus forecast for a 389 billion won loss. 

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Hynix said the average price of its dynamic random access memory (DRAM) chips, mainly used in personal computers, fell 11 percent in the third quarter after rising 9 percent in the second quarter of 2008.   

The price drop contributed to the fall of its margins on earnings before interest, tax, depreciation and amortisation (EBITDA) to 14 percent in July-September from 29 percent in the previous quarter, the company said in a statement.   

Prices of NAND flash memory, used in portable gadgets, fell 23 percent compared with a 3 percent rise in the second quarter, Hynix said.

Makers of DRAM chips are mired in a deep market slump that started in early 2007. The price of some key products fell more than 90 percent in 2007 and, after posting some gains in the first half, slumped again as the global financial crisis spread into the real economy.

Shares of Hynix, valued at about $3 billion, were up 5 percent at 9,830 won, outpacing the wider market's 4 percent rise. The stock fell 22.6 percent in the third quarter, outpacing the KOSPI's 13.5 percent drop.

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