Tech

South Korean chipmaker SK Hynix says second-quarter profit down 89%

Key Points
  • South Korean chipmaker SK Hynix reported its smallest quarterly earnings in three years on Thursday as slumping memory prices drove an 89% drop in second-quarter operating profit.
  • The world's second-largest memory chip maker behind Samsung Electronics said April-June profit was 638 billion won ($541.9 million), missing a 828 billion won Refinitiv SmartEstimate.
  • To cope with the slowing chip market, the company said investment next year was expected to be "significantly lower" than this year.
Signage for SK Hynix Inc. is displayed on access gates at the entrance to the company's office in Seongnam, South Korea, on Monday, July 24, 2017.
SeongJoon Cho | Bloomberg | Getty Images

South Korean chipmaker SK Hynix reported its smallest quarterly earnings in three years on Thursday as slumping memory prices drove an 89% drop in second-quarter operating profit.

The world's second-largest memory chip maker behind Samsung Electronics said April-June profit was 638 billion won ($541.9 million), missing a 828 billion won Refinitiv SmartEstimate.

SmartEstimates give more weight to recent estimates by analysts who are more consistently accurate.

To cope with the slowing chip market, the company said investment next year was expected to be "significantly lower" than this year.

Prices of NAND flash memory chips have fallen sharply over the past year as output grew faster than demand and the U.S.-China trade war played havoc with global markets for electronics like smartphones.

Prices for DRAM chips, which help devices perform multiple tasks, declined 25% in the second quarter from three months earlier, according to data from tech researcher TrendForce.

SK Hynix said it would cut DRAM output capacity from the fourth quarter and increase its planned NAND wafer input reduction this year to more than 15% from 10% previously.

South Korea's chip giants also have been hit by Japanese curbs on the export of key materials, the latest salvo in a diplomatic row between Seoul and Tokyo over wartime forced labor.

In the long term, Japan's export restrictions could lead to reductions in stockpiles and production which is good news for chip prices, analysts say.

Revenue fell 38% from a year earlier to 6.5 trillion won, SK Hynix said.