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SK Hynix
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Analysts attribute drop-off to end of semiconductor boom
SK Hynix recorded 9.94 trillion won (US$8.84 billion) in sales and 4.43 trillion won (US$3.94 billion) in operating profits for the fourth quarter of 2018, the company announced on Jan. 24. The totals were respectively down by 13% and 31.6% from the previous quarter – indicating an “earning shock” far beyond what the market had been expecting. Analysts attributed the drop-off to the fourth quarter marking the end of the “super boom” sustained in semiconductors for the past two years. At the same time, SK Hynix’s hit record annual figures for a second straight year, including 40.45 trillion won (US$35.98 billion) in sales and 20.84 trillion won (US$18.53 billion) in operating profits for 2018. SK Hynix’s fourth quarter sales were down 13.0% from a record high of 11.42 trillion won (US$10.16 billion) the previous quarter, while operating profits fell 31.6% from an also record-high 6.47 trillion won (US$5.75 billion) the quarter before. Quarterly performance failed to live up to expectations amid a decline in market conditions as shipments of D-RAM, the company’s mainstay product, fell by 2% between the third and fourth quarters and the average selling price (ASP) dropped by a full 11%. The company’s 4.43 trillion won (US$3.94 billion) in operating profits fell far short of the market’s average prediction of 5.1 trillion won (US$4.54 billion). Previously in excess of 50%, the operating profit ratio fell to 44.6%, its lowest level since the first quarter of 2018. Quarterly operating profits exceeded 5 trillion won (US$4.45 billion) for two straight quarters in 2Q18 and 3Q18. Annually, SK Hynix recorded 40.45 trillion won (US$35.97 billion) in sales and 20.84 trillion won (US$18.53 billion) in operating profits for 2018, registering record highs for a second straight year. “Demand has risen sharply, especially for data centers and high-performance mobile devices, and we have responded proactively to demand for high value-added products,” SK Hynix explained. The company announced that was drastically lowering its investment from 17 trillion won (US$15.12 billion) last year and decreasing its equipment investment by around 40%. By Choi Hyun-june, staff reporter Please direct comments or questions to [english@hani.co.kr]
