South Korea’s SK Hynix Doubles Profit on Strong Chip Demand

South Korea's chip industry estimates that about 20% of chip equipment and 50% of chip materials have been localised, the industry ministry said. File photo: Reuters.

SK Hynix, the South Korean semiconductor manufacturer, more than doubled first-quarter earnings, helped by robust demand from server clients and a disruption at a rival plant.

The world’s second-biggest memory chipmaker said on Wednesday its operating profit rose 116% to 2.9 trillion won ($2.3 billion) in the January-March quarter.

That is the highest first-quarter profit since 2018 – and up from 1.3 trillion won a year earlier. Analysts expected profit of 3.1 trillion won, according to Refinitiv SmartEstimate.

“As demand for server chips is on the rise, the memory business will improve into the second half,” Kevin Noh, chief marketing officer at SK Hynix, said.

SK Hynix shares fell 2.2% on Wednesday.

Delivery delays in chip equipment caused by component shortages have hobbled capacity expansions and upgrades across the chip manufacturing industry.

But SK Hynix will strive to meet customer demand by improving its yield rate, Noh said. The percentage of devices on a wafer that perform properly is referred to as its yield.

“Consumption of some IT products slowed down from the start of the year amid ongoing challenges, including the supply chain issue,” the company said in a statement.

A disruption at a rival NAND flash chip plant owned by Japan’s Kioxia and Western Digital in February due to contamination of raw materials helped shipments of SK Hynix chips and fuelled a quarter-on-quarter price rise for NAND flash chips, analysts said.

However, slowing demand for mobile chips due to China’s Covid-19 lockdown and inflationary pressures weighed on earnings.

Reuters, with additional editing by George Russell

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George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.