* Q3 operating profit 1.2 trln won vs 1.08 trln won fcast
* Says fire cut DRAM shipments, boosted prices 5 pct
* Expects Q4 DRAM, flash shipments down over 10 pct due to fire
* Says fire-hit plant to restore operations to normal level in Nov
* Hynix shares down 2 pct after Q3 (Recasts with Hynix comments on China plant, analyst's comment, Q4 forecasts)
By Miyoung Kim
SEOUL, Oct 29 (Reuters) - South Korea's SK Hynix Inc is in danger of missing an extended rally in the memory chip market after posting two quarters of record profit, as it warned on Tuesday of a drop in chip shipments following a fire at its Chinese plant.
The world's second-biggest manufacturer of memory chips posted a forecast-beating record quarterly profit as a rally in computer memory chip prices helped cushion reduced output following the fire early last month.
But the Apple Inc supplier could lose market share to rivals such as Samsung Electronics Co Ltd and Micron Technology Inc in the fourth quarter as it struggles to bring the fire-hit facility back to full production.
"Production at the Wuxi plant will go back to normal operation level during November but there could be around one month of delay depending on the supply conditions of related equipment and parts," Hynix's president Kim Joon-ho told analysts.
The blaze at the China plant - which produced around 15 percent of global dynamic random access memory (DRAM) chips used in computers - has added upward pressure on DRAM chip prices, benefitting Hynix's rivals. Prices already had been rising since late last year due to a supply crunch as manufacturers switched from producing computer DRAM chips to making NAND and mobile DRAM semiconductors for the booming mobile device market.
Kim expected Hynix's DRAM shipments to drop by around 10 percent to 15 percent in the current quarter, while shipments of NAND flash memory chips would fall by 15 percent.
"Hynix will for sure lose its market share to rivals, and the impact will be most visible in the current quarter and will last at least until the first quarter of next year because production will recover quite gradually," said Lee Sun-tae, an analyst at NH Investment & Securities.
"The key is whether current strong chip prices will continue long enough to ease the impact of reduced output. I think the overall situation doesn't look so bad, as demand from China will pick up early next year."
Hynix on Tuesday reported 1.2 trillion won ($1.1 billion) in operating profit for July-September, above analysts' consensus forecast of 1.08 trillion won, according to Thomson Reuters I/B/E/S.
The result was ahead of a 1.1 trillion won profit in the second quarter and a loss of 24 billion won a year ago. Revenue for the quarter jumped 69 percent to a record 4.1 trillion won.
Shares in Hynix traded down 1.5 percent after the earnings announcement versus a 0.1 percent gain in the broader market .
Average selling prices of Hynix's mainstay DRAM chips rose 5 percent in the third quarter due largely to tighter supply following the fire, offsetting a 2 percent drop in shipments.
Earnings are expected to dip in the current quarter as production slowly recovers at the partially operating Wuxi plant, which used to produce half of Hynix's DRAM semiconductors. The company is also reallocating production resources from flash memory chips to DRAM chips in response to the supply squeeze.
Its operating profit is seen falling by 31 percent to 759 billion won in the fourth quarter from the previous period, according to a survey of 39 analysts by I/B/E/S prior to the Tuesday's earnings announcement.
The fourth-quarter outlook for Hynix and its competitors improved somewhat on Monday when Apple chief executive Tim Cook predicted a "really great" holiday season, raising hopes for stronger demand for the U.S. company's new iPhone 5S and 5C during the Christmas season.
Hynix said solid sales of new mobile devices over the holiday period could buoy shipments of flash memory chips, just as its NAND production capacity will shrink by up to 30 percent due to resources reallocation to DRAMs. (Editing by Stephen Coates)