SK Hynix Posts Trillion-Won Operating Loss for Second Consecutive Quarter... "Inventory Will Decrease" (Update)

SK Hynix recorded an operating loss in the first quarter due to the sluggish semiconductor market. Despite the unfavorable market conditions, SK Hynix expects inventory reduction to occur down to the supply tier starting from the second quarter. The company plans to focus on recovering performance by increasing sales centered on high-performance memory products.

SK Hynix announced on the 26th that its first-quarter sales this year amounted to 5.0881 trillion KRW, a 58% decrease compared to the same period last year. The operating loss for the first quarter was 3.4023 trillion KRW. Following an operating loss of 1.8984 trillion KRW in the fourth quarter of last year, the company posted losses for two consecutive quarters. The operating loss ratio was 67%, with a net loss of 2.5855 trillion KRW.

SK Hynix explained the poor performance by stating, "The downturn in the memory semiconductor market continued in the first quarter, with weak demand and a trend of falling product prices." They also forecasted, "Starting from the first quarter as the bottom, sales volume will gradually increase, leading to a rebound in sales performance in the second quarter."

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SK Hynix expects that as customers’ inventory levels turned to a declining trend in the first quarter, the supply companies’ inventory will also decrease in the second quarter due to production cuts. This forms the basis for their expectation that the market environment will improve in the second half of the year. The growing market for high-performance servers for artificial intelligence (AI) such as ChatGPT and the increasing number of customers adopting high-capacity memory are also positive factors.

To respond to this market demand, SK Hynix will focus sales on products such as high-performance DRAM including server-grade Double Data Rate (DDR)5 and High Bandwidth Memory (HBM), as well as solid-state drives (SSD) based on 176-layer NAND. They plan to continue investing in the latest memory products during this process.

Kim Woo-hyun, Chief Financial Officer (CFO) of SK Hynix, said, "We will do our best to improve profitability and technology development to restore corporate value," adding, "We will solidify our premium market leadership focusing on products such as DDR5, LPDDR5, and HBM3, which are expected to see significant demand growth starting this year.”

According to the average earnings forecast compiled by financial information firm FnGuide, SK Hynix’s operating loss forecast for the second quarter is 3.3282 trillion KRW. The securities industry expects SK Hynix to record a loss in the 3 trillion KRW range, similar to the first quarter. The sales forecast for the second quarter is 5.11 trillion KRW, a 63% decrease compared to the same period last year.

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