[Click eStock] "SK Hynix, This Year's Component Shortage Is Next Year's Growth Engine"

Declining PC Demand Can Be Offset by Increased Smartphone Demand

[Image source=Yonhap News]

[Asia Economy Reporter Minwoo Lee] SK Hynix is expected to achieve improved performance this year as smartphone demand, which had been sluggish due to parts shortages, recovers.

On the 29th, Hyundai Motor Securities maintained its 'Buy' investment rating and target price of 170,000 KRW for SK Hynix based on this background. The closing price the previous day was 130,000 KRW. Geunchang Noh, a researcher at Hyundai Motor Securities, stated, "All DRAM companies need to expand production facilities, but investment capacity is expected to be limited for various reasons, and the supply of key equipment is also not smooth. Next year, concerns about oversupply in semiconductor chip companies are limited, but there is significant worry that PC demand, which benefited from COVID-19, will decrease starting next year."

However, he predicted that the recovery in smartphone demand and wearable devices will generate new demand. Researcher Noh said, "COVID-19 is driving new semiconductor demand through metaverse, autonomous driving, gaming TVs, and wearable products that monitor biometric signals, and server demand expansion remains high due to cloud and edge computing. Especially this year, smartphone supply has been disrupted due to parts shortages, but next year, much of this will be resolved, sufficiently offsetting the decline in PC demand," he forecasted.

Meanwhile, SK Hynix recorded consolidated sales of 8.4942 trillion KRW and operating profit of 1.3244 trillion KRW in the first quarter of this year. These figures represent increases of 17.99% and 65.49%, respectively, compared to the same period last year. However, operating profit was 1.52% lower than market consensus. Researcher Noh explained, "The bit growth rates for DRAM and NAND in the first quarter were 4.0% and 21.0%, respectively. The bit growth for NAND significantly exceeded estimates due to increased shipments of SSDs for laptops."

In the second quarter, server DRAM and PC DRAM are expected to rise by more than 20% compared to the previous quarter, with NAND also expected to increase by 3%. Therefore, second-quarter sales and operating profit are forecasted to increase by 12.6% and 104.4% from the previous quarter to 9.561 trillion KRW and 2.705 trillion KRW, respectively. Researcher Noh said, "Some are concerned about memory price increases starting in the third quarter due to reduced assembly demand for smartphones and PCs caused by semiconductor parts shortages, but server replacement demand following Intel's 'Ice Lake' launch and increased safety stock by finished product companies will cause DRAM prices to rise by about 5% compared to the previous quarter in the third quarter as well."

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