SK Hynix expects chip supply shortages in 2021 as fourth-quarter profit surges

SEOUL (Reuters) - SK Hynix, the world’s No.2 memory chip maker, forecast high demand this year and warned of possible shortages of certain semiconductors including those that power many consumer devices.

FILE PHOTO: The logo of SK Hynix is seen at its headquarters in Seongnam, South Korea, April 25, 2016. REUTERS/Kim Hong-Ji

The global shift to remote work is driving demand for advanced chips to power premium devices, outstripping supply which was already tight due to under-investment in DRAM manufacturing facilities owned by Asian firms.

SK Hynix said it is speeding up moving its 8-inch chip contract manufacturing line to China, a move originally planned to be carried out over two years, to take advantage of the booming 8-inch foundry business.

SK Hynix said 2021 demand for server and mobile DRAM products, which go into devices, will remain high as global companies invest in new data centres and the 5G smartphone market more than doubles on-year, leading to a DRAM demand jump that could be as high as 20% on year.

“For mobile (DRAM) chips in the near term, supply is significantly falling below satisfaction rate for demand,” said MS Park, vice president and dead of DRAM marketing.

In NAND memory chips that serve the data storage market, SK Hynix expected the market to recover from the second half of the year as customers use up inventory and ramp up adoption of high-capacity chips. The chipmaker said it will strive to turn its existing NAND business to profit within this year.

However, SK Hynix said that its 2021 capital expenditure will be only slightly higher than 2020’s 9.9 trillion won ($8.9 billion) as it prioritises migrating to advanced technology rather than expanding capacity.

Analysts said its relatively conservative stance also stems from its plans to spend $7 billion, likely by the end of this year, as part of its deal to buy Intel’s NAND memory chip business for $9 billion.


SK Hynix’s fourth-quarter profit surged four-fold on a better-than-expected rise in chip shipments, offsetting lower chip prices.

The South Korean company, which counts Apple Inc among its customers, reported an operating profit of 966 billion won ($868 million) in October-December, up from a low base of 242 billion won a year earlier.

That beat a Refinitiv Smartestimate for a 926 billion won profit. The Smartestimate, which gives more weight to consistently accurate analysts, was drawn from 20 analysts.

Fourth-quarter revenue rose 15% to 8 trillion won.

Shares in SK Hynix rose 2% by 0221 GMT, compared to the wider market’s 1.1% drop.

Reporting by Joyce Lee and Heekyong Yang; additional reporting by Jihoon Lee; Editing by Richard Pullin and Stephen Coates