SK Hynix, Growing Expectations for First Quarter Earnings Performance

Operating Profit Expected by Market at 509.1 Billion KRW
Driven by Rising Prices of Server DRAM

[Asia Economy Reporter Dongwoo Lee] Expectations for SK Hynix's first-quarter earnings this year are rising. It is anticipated that the company may exceed market forecasts due to the continued rise in memory semiconductor prices and the sharp increase in the KRW-USD exchange rate earlier this year.

According to financial information provider FnGuide on the 18th, SK Hynix's operating profit for the first quarter is expected to be 509.1 billion KRW, a 62.7% decrease compared to the same period last year, but a 115.7% increase compared to the previous quarter. Considering that the initial market consensus was in the mid-400 billion KRW range, this represents an increase of over 50 billion KRW.

The rise in prices of server DRAM, SK Hynix's main product, is expected to drive first-quarter earnings. According to market research firm DRAMeXchange, the price of 32GB server DRAM in March was $121, up 4.3% from the previous month. During the same period, the average fixed transaction price of DDR4 8-gigabit (Gb) DRAM, mainly used in PCs, also rose 2.08% month-on-month to $2.94.

The increase in PC and server demand due to remote work caused by the COVID-19 pandemic is also expected to be partially reflected in the earnings. Inventory accumulation demand is also increasing due to anxiety over the spread of COVID-19 and data center expansions, mainly among key customers. Researcher Jaeyoon Lee of Yuanta Securities said, "Data center production capacity expansion is accelerating, centered on Amazon, Google, and Microsoft."

The strong KRW-USD exchange rate also had a positive impact on first-quarter earnings. The KRW-USD exchange rate has risen more than 5% compared to early this year. Researcher Kyungmin Kim of Hana Financial Investment explained, "If the KRW-USD exchange rate rises by 10 won, SK Hynix's operating profit increases by up to several tens of billions of won."

However, concerns are growing that semiconductor industry earnings may sharply decline in the second quarter. According to Gartner, the semiconductor market revenue growth forecast has been lowered from 12.5% to -0.9%. Accordingly, the total semiconductor market revenue is expected to fall to $415.4 billion, about $55 billion less than previously estimated.

This content was produced with the assistance of AI translation services.