Hynix reports quarterly net loss on won, costs

SEOUL, South Korea - Hynix Semiconductor Inc. said Thursday it swung to a net loss in the third quarter amid weakness in the South Korean won, a writedown to close outdated plants and falling prices for flash memory chips.

Hynix, one of the world's biggest chip makers, lost 1.65 trillion won ($1.27 billion) in the three months ended Sept. 30, the company said in a regulatory filing. Hynix posted net profit of 168.2 billion won a year earlier.

The loss was wider than the 707.8 billion won in red ink the company recorded in the second quarter of this year.

Sales during the third quarter fell 20 percent to 1.87 trillion won ($1.44 billion) from 2.34 trillion won a year earlier.

Hynix said weakness in the South Korean won against the dollar — which made it more expensive to service foreign debt — was a key factor behind the net loss.

The won, which rallied 14 percent Thursday, has still declined about 25 percent against the U.S. dollar so far this year.

Hynix also cited a valuation loss from shutting down two older, inefficient manufacturing facilities during the quarter.

The company said that a 23 percent price decline for NAND flash memory chips used in digital devices such as cameras and music players was another negative factor.

Hynix competes with domestic rival Samsung Electronics Co. in NAND flash and DRAM, or dynamic random access memory, chips. DRAMs are used mostly in personal computers.

Semiconductor manufacturers have been hurt by a prolonged bout of falling prices for both kinds of chips amid oversupply in the industry.

Lower memory chip prices contributed to Samsung's third-quarter profit decline of 44.4 percent, announced last week.

"(The) memory semiconductor market continued to be slow in the third quarter with growing concerns over global economic recession," O.C. Kwon, a Hynix senior vice president, told analysts on a conference call.

"Seasonal demand for both DRAM and NAND flash was weak as our customers took (a) cautious stance with regard to inventories under (the) uncertain economic environment," he added.

He characterized the current downturn for chips as "one of the worst ... in memory market history."

Shares in Hynix, which released earnings results before the stock market opened, surged 14.7 percent to close at 10,740 won ($8.60), beating the overall stock market's 12 percent gain.

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