[Click eStock] "SK Hynix to Post Over 4 Trillion Won Loss in 1Q"

DRAM Shipment Volume and Average Selling Price Decline
Deficit Expected to Exceed 3 Trillion Won in Q2
Demand Recovery Anticipated to Accelerate from Q3

SK Hynix's first-quarter loss is expected to fall short of consensus, and its poor performance is anticipated to continue into the second quarter. However, memory demand is expected to recover significantly from the third quarter. Accordingly, the investment rating of 'Buy' and the target price of 117,000 KRW were maintained.

So-Young Moon, a researcher at NH Investment & Securities, stated, "The first-quarter operating loss is expected to be 4.02 trillion KRW, falling short of consensus," adding, "This is because DRAM shipments are expected to decrease by 19% compared to the previous quarter, and the average selling price (ASP) is expected to drop by 30%."

[Image source=Yonhap News]

Researcher Moon explained, "The factors deepening the sluggish market conditions include data center investment, weak smartphone sales, and aggressive low-price shipment strategies by memory companies to reduce high inventory levels." Additionally, the expansion of inventory valuation losses due to falling memory prices is also expected to impact earnings.

Researcher Moon forecasted that the decline in memory prices will continue into the second quarter, though the rate of decline is expected to improve. He projected, "The operating loss for the second quarter is expected to be 3.33 trillion KRW," and observed, "The average prices of DRAM and NAND are expected to fall by 1% and 2%, respectively."

A performance rebound is expected to begin in the third quarter, as inventory levels are anticipated to peak in the first quarter and decrease from the second quarter onward. Researcher Moon noted, "The overall industry is reducing investments and cutting production in 2023 to reverse memory supply and demand, which is positive," and added, "Competitors with investment capacity have also recorded large-scale losses in the semiconductor sector from the first quarter, shifting to a conservative investment strategy."

He continued, "From the third quarter, investment demand recovery is expected due to increased peak operating rates in data centers," and analyzed, "China's reopening, improvements in Android AP performance, and increased content per smartphone device due to lower memory prices are also expected to contribute to demand."

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