[Click eStock] "SK Hynix, Slightly More Sluggish in 3Q"

Server Demand Drops Sharply... Mobile Demand Recovery Still Insufficient
"Memory Shipments and Prices Expected to Rebound by Q2 2021"

[Asia Economy Reporter Minwoo Lee] SK Hynix is expected to continue its sluggish performance in the third quarter. This is interpreted as the recovery in mobile demand in the second half not fully compensating for the decline in server demand.

On the 27th, DB Financial Investment forecasted that SK Hynix would achieve sales of 7.748 trillion KRW and an operating profit of 1.254 trillion KRW in the third quarter of this year. Compared to the same period last year, these figures represent increases of 13.3% and 165%, respectively. However, compared to the previous quarter, sales are expected to decrease by 10% and operating profit by 35.6%. Considering that the third quarter is usually a peak season, this is analyzed as a continued underperformance. Researcher Kyu-jin Uh of DB Financial Investment stated, "Due to some inventory replenishment by data center companies in the first half, DRAM shipments are expected to decrease by 4.2%, and prices are anticipated to fall by 7.3%," adding, "NAND flash shipments are expected to increase by 6.3% due to new mobile launches, but prices are forecasted to decline by 4.3%."

Although mobile demand is recovering in the second half, it is not enough to offset the decrease in server memory demand from data center companies. Additionally, the resurgence of the novel coronavirus (COVID-19) is viewed negatively for global IT demand. Researcher Uh said, "The rebound in memory shipments and prices is expected to be delayed until the second quarter of 2021," and added, "However, after a temporary adjustment period, the memory market is expected to gradually improve due to strong demand driven by the 2021 base effect and supply growth restrictions." This means that while short-term concerns persist due to ongoing COVID-19 issues, the medium- to long-term outlook for the memory market remains positive.

Against this backdrop, DB Financial Investment maintained a 'Buy' rating on SK Hynix but lowered the target price by about 8.3% to 110,000 KRW. The closing price the previous day was 78,800 KRW. Researcher Uh predicted, "The trend toward non-face-to-face IT due to the habituation of untact lifestyles will continue," and added, "Ultimately, the performance improvement driven by increased memory demand will proceed gradually and over the long term."

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