April 24, 2014 / 12:05 AM / in 4 years

CORRECTED-UPDATE 1-SK Hynix Q1 profit beats estimates on DRAM sales growth

(Corrects paragraph 8 to say NAND prices fell 14 pct, not shipments)

* Q1 profit 1 tln won vs 971 bln won forecast

* Tight DRAM supply conditions to support earnings

SEOUL, April 24 (Reuters) - SK Hynix Inc., the world’s second-largest memory chipmaker, reported a 35 percent rise in first-quarter operating profit as a key China plant returned to full production and boosted sales.

The restoration of the fire-hit Wuxi plant comes as supply conditions for dynamic random access memory chips used for personal computers are tight, helping to support the chipmaker’s bottom line in the face of declining global PC sales.

The South Korean firm, which competes with market leader Samsung Electronics Co Ltd, Japan’s Toshiba Corp. and U.S.-based Micron Technology Inc, posted an operating profit of 1 trillion won for the January-March period.

The result was slightly better than the average forecast from 34 analysts polled by Thomson Reuters I/B/E/S of 971 billion won. It was in line with StarMine’s SmartEstimate, which gives greater weighting to more accurate analysts.

Average DRAM contract prices fell 1.56 percent in the second half of March, according to price tracker DRAMeXchange.com, reflecting weak sales of personal computers which have hurt demand for DRAM chips.

Offsetting the price slump is a rush to replenish inventory levels hit by the fire late last year at the Wuxi plant, which made 15 percent of global DRAM chips prior to the incident.

SK Hynix said DRAM chip shipments in the first quarter rose by 20 percent from the previous three-month period, with prices remaining flat.

Meanwhile a ramp-up in production is driving down prices of more lucrative NAND memory chips used in mobile phones. SK Hynix said NAND chip prices fell 14 percent in the January-March period from the previous quarter, while shipments dropped 8 percent.

The price pressures could be cushioned by higher demand linked to the release of new smartphones in the coming months, including the next iPhone from major Hynix client Apple Inc .

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. (Reporting by Se Young Lee; Editing by Stephen Coates)

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