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CORRECTED-UPDATE 2-SK Hynix tips strong Q2 as chipmakers bank on mobile growth
April 24, 2014 / 5:20 AM / in 4 years

CORRECTED-UPDATE 2-SK Hynix tips strong Q2 as chipmakers bank on mobile growth

(Corrects paragraph 11 to show that China plant was back to full production in Q1)

* Q1 profit 1 tln won vs 971 bln won forecast

* Q2 DRAM chip shipments seen rising around 10 pct vs Q1

* Q2 NAND chip shipments to rise by mid-40 pct range vs Q1

* Stronger demand from new smartphones seen a key Q2 catalyst

By Se Young Lee

SEOUL, April 24 (Reuters) - SK Hynix Inc., the world’s second-largest memory chipmaker, expects a strong pickup in memory chip shipments for the second quarter as the launch of new smartphones by manufacturers like Apple Inc. boosts demand.

The upbeat outlook follows positive guidance from ARM Holdings and Micron Technology Inc., suggesting global chipmakers are poised to benefit from tight supply of personal computer memory chips and stronger sales of more lucrative mobile chips used in smartphones and tablets.

The rollout of the 4G LTE network in China, the world’s biggest smartphone market, is also likely to lift sales of semiconductors for mobile devices, SK Hynix said.

“Demand for mobile DRAM ... should pick up in the second quarter because of the release of new smartphones, China’s mobile market entering a peak season and the expansion of the LTE network in the country,” SK Hynix president Kim Joon-ho told analysts during a conference call on Thursday.

The South Korean firm reported a first-quarter operating profit of 1 trillion Korean won ($961.95 million), the third-best on record and better than the average forecast for 971 billion won from a survey of 34 analysts by Thomson I/B/E/S.

Shipments of DRAM chips were expected to jump by 10 percent in the April-June period from the previous quarter, while shipments of NAND memory chips, primarily used for mobile devices, were expected to leap in the “mid-40-percent range”.

This could mark the sharpest quarterly jump in NAND shipments since 2007, though much of the growth would be due to a low base following two previous quarters of shipment contraction.

SK Hynix’s results came a day after Britain’s ARM Holdings said it expected demand for smartphones to pick up in the second half of the year.

Earlier this month U.S.-based Micron reported better-than-expected results for its fiscal second quarter, and Taiwan Semiconductor Manufacturing Co Ltd, the world’s largest contract chip producer, said it was targeting record revenue in the second quarter.


Though sales of personal computers are on the decline, SK Hynix’s DRAM earnings were supported by tightened supply resulting from a fire at its key China manufacturing plant late last year.

The company said the Wuxi plant - which made 15 percent of global DRAM chips prior to the incident - was back to full production in the first quarter, ready to fill orders as customers replenished their depleted inventories.

Sales would be further stimulated by the release of new smartphones in coming months, especially the next iPhone from major client Apple.

On Wednesday, Apple reported sales of 43.7 million iPhones in the quarter ended March, far outpacing the roughly 38 million that Wall Street had predicted. The company is preparing two new versions of the device with larger screens, at least one of which should be launched during the second half of the year.

“Industry conditions have been pretty good compared with the past, considering that we have passed the seasonally weaker period,” said HI Investment & Securities analyst Song Myung-sub.

“And the outlook doesn’t look bad, either.”

Shares of SK Hynix, valued at $27.9 billion, were flat in afternoon trade as investors had already priced in strong earnings expectations.

The shares peaked on Wednesday at their strongest level since March 2002. ($1 = 1039.5500 Korean Won) (Reporting by Se Young Lee; Editing by Stephen Coates)

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