SK hynix cuts investments by 50%
South Korean SK hynix recorded revenues of KRW 10.98 trillion (EUR 7.69 billion) during the third quarter of 2022, down from KRW 13.81 trillion (EUR 9.67) during the previous quarter.
Third-quarter operating profit amounted to KRW 1.66 trillion (EUR 1.16 billion), and net income of KRW 1.1 trillion (EUR 770.9 million). Sales and operating profits decreased by 20.5%, and 60.5% respectively QoQ.
During the company's second quarter of 2022, SK hynix reported KRW 13.81 trillion (EUR 9.67) in revenues, KRW 4.19 trillion (EUR 2.93 billion) in operating profit, and a net income KRW 2.88 trillion (EUR 2.01 billion).
SK hynix says in its report that its revenues fell QoQ as both sales volume and price decreased due to sluggish demand for DRAM and NAND products amid a worsening macroeconomic environment globally.
The South Korean company states that the semiconductor memory industry is facing an unprecedented deterioration in market conditions as uncertainties in the business environment continued. The deterioration occurred as the shipments of PCs and smartphone manufacturers, which are major buyers of memory chips, decreased.
However, the company expects that demand for memory chips in datacenter servers – while decreasing in the short term – will continue to grow in the mid- to long-term perspective.
Regardless of the currently market developments, SK hynix says that it will expand mass production of the industry’s first 238-layer 4D NAND next year, which was developed in the third quarter of this year – a strategy which the SK hynix believes will secure its cost competitiveness and increase its profitability.
Meanwhile, SK hynix expects that supply will continue to exceed demand for the time being. And due to this, the company has decided to reduce its investment next year by more than 50% YoY. The current year’s investment is expected to be at the upper range of 10-20 trillion won (EUR 7-14 billion).
The company also revealed that it plans to gradually reduce production volume focusing on relatively less profitable products. The plan is to normalise the market’s supply and demand balance.