SK Hynix Reduces Q3 Losses and Turns DRAM Profitable

NAND Recovery Expected to Turn Profitable by Early Next Year
Positive Factors Including Production Cuts and Increased HBM Demand

SK Hynix recorded a loss in the third quarter due to the memory semiconductor downturn. However, the loss decreased by about 38% compared to the previous quarter. Additionally, the company succeeded in turning a profit in its DRAM business for the first time in two quarters. The company is optimistic about returning to profitability on a monthly basis early next year.

On the 26th, SK Hynix announced that its consolidated provisional sales for the third quarter reached 9.0662 trillion KRW. This represents a 17.5% decrease compared to the same period last year (10.9829 trillion KRW). The company also posted a consolidated provisional operating loss of 1.792 trillion KRW, which is below the securities market consensus operating loss forecast of 1.6402 trillion KRW. In the third quarter of last year, the company recorded an operating profit of 1.6556 trillion KRW.

However, sales are increasing and losses are rapidly decreasing. Compared to the previous quarter (second quarter), sales increased by 24.1%, and operating losses decreased by 37.8%. SK Hynix stated, "The DRAM business turned profitable after two quarters." The losses, which reached 3.4023 trillion KRW in the first quarter, decreased to 2.8821 trillion KRW in the second quarter and 1.792 trillion KRW in the third quarter, showing a significant reduction each quarter. The difference between the second and third quarters exceeds 1 trillion KRW.

The headquarters of SK Hynix in Icheon-si, Gyeonggi-do. [Photo by Yonhap News]

There is speculation that the company could return to overall profitability by the first half of next year at the latest. The recovery in performance is attributed to demand for premium products such as high-bandwidth memory (HBM) semiconductors used in artificial intelligence (AI) graphics processing units (GPUs).

The effect of production cuts in the memory semiconductor industry has also begun to take full effect, which is positive news. Typically, when semiconductor companies reduce production, the average selling price (ASP) rises, positively impacting performance growth. Taiwanese market research firm TrendForce predicted on the 13th that the DRAM ASP for the fourth quarter (October to December) would increase by 3-8% compared to the previous quarter. By segment, PC, server, graphics, and consumer DRAM ASPs are expected to rise by 3-8%, while mobile DRAM ASP is expected to increase by 3-10%.

The fixed transaction price of DRAM, a semiconductor market indicator, also stopped declining last month. Global market research firm DRAMeXchange reported that the average fixed transaction price of PC DRAM general products (DDR4 8Gb 1Gx8) last month was $1.30, maintaining the August price. After falling 19.89% in April compared to the previous month (March), semiconductor prices had declined for five consecutive months until August but now appear to have bottomed out and are showing signs of rebound.

Kim Hyung-tae, a senior researcher at Shinhan Investment Corp., said, "Once the production cut effect in memory semiconductors fully manifests, demand for inventory purchases before price increases is expected to rise, and the rebound in spot prices will further boost expectations for SK Hynix's performance." He added, "From the fourth quarter, prices of both DRAM and NAND flash are expected to rise simultaneously, accelerating the improvement in the memory semiconductor market conditions."

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