The launch of premium electronic products in the third quarter are likely to lend support for its DRAM and NAND chips.
South Korean memory chip manufacturing giant, SK Hynix Inc. has reported a fall in its second quarter profits, its lowest in more than three years. However, it is optimistic that in the coming months, this trend will be offset by the launch of new electronic products, including smartphones, which is likely to boost its sales.
Hynix’s sales have been hurt by the fall of demand in consumer electronics.
“The third quarter is a time when demand from key clients for new smartphone products rises significantly, which will have a positive effect,” said SK Hynix in a statement.
As per regulatory filings, SK Hynix’s April-June profit touched a low of $397 million (453 billion won), its lowest since the first quarter of 2013.
With this information hitting the news circuits, its shares dipped by 2.1% compared to the 0.2% rise for the broader market.
According to Lee Jae-yun, an analyst from Yuanta Securities, concerns related to tougher competition midst speculation of a potential takeover of U.S. Micron Technology Inc is weighing on investor sentiment.
Earlier this month, Micron had announced job cuts and had adopted cost saving features after announcing a weaker than expected third quarter results, which only goes to underscore the general conditions of the industry.
Significantly, global economic conditions are weighing down on demand for electronic products ranging from personal computers to smartphones, which in turn are hurting DRAM prices.
Hynix has reported an average fall of 11% in its second quarter shipments, while the shipments of DRAM chips has reported a rise of 18% for the period of January to March. While shipments of NAND chips rose by 52% while their average selling price fell by 11%.
However, in the coming months, the launch of premium products, including those from Samsung Electronics and Apple Inc. could help boost the chip manufacturer’s bottom line.
According to TrendForce, a research firm, contract prices for DRAM chips are likely to rise in the range of 4% to 8% in the third quarter.
Furthermore, Hynix has also reported that it will push the sales of memory chips for vehicles while focusing on high-end applications such as self-driving technologies.
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