Published: Thursday, 23 Jul 2009 | 8:50 PM ET

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Hynix Semiconductor, the world's second-biggest maker of memory chips, reported a sharply narrower quarterly net loss on Friday as the memory market shows signs of recovering from a deep downturn.

The outlook is encouraging as Hynix is expected to swing back to an operating profit in the current quarter, helped by steady price increases in its mainstay computer chips.

Hynix said prices of its DRAM chips rose 20 percent in the second quarter, after falling 7 percent in January-March. NAND flash memory chip prices rose 23 percent after rising 10 percent in the previous quarter.

Hynix reported a 58 billion won ($46.59 million) net loss in the quarter ended in June on a consolidated basis, in line with a 68.6 billion won shortfall forecast by earnings tracker IBES.

It was the South Korean company's seventh consecutive quarterly net loss, but compared favourably with a 711 billion won net loss in the year-earlier quarter and a 1.18 trillion won shortfall in January-March. 

A long-awaited recovery in the memory chip sector may be finally materialising and prices of dynamic random access memory (DRAM) chips, used in personal computers, have risen following massive output cuts.

Still, a swift resurgence is not to be expected in the industry, ravaged by more than two years of tumbling prices and low demand.

Shares in Hynix rose over 2 percent in early Friday trade, ahead of the wider market's rise. Hynix shares have climbed one and a half times so far this year through Thursday, fueled by hopes for a memory sector turnaround, leading the wider market's 33 percent gain.

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Its consolidated second-quarter operating loss was 211 billion won, in line with a forecast for a 198.1 billion won loss. 

Consolidated sales came at 1.68 trillion won against a 1.55 trillion won forecast.

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