SK Hynix posts profit as chip demand improves

(AP) SK Hynix posts profit as chip demand improves
By YOUKYUNG LEE
AP Technology Writer
SEOUL, South Korea
South Korean chipmaker SK Hynix Inc. reported a second straight quarterly profit as its debt load eased and sales benefited from increased demand for chips used in smartphones and servers.

The company said Wednesday its October-December net profit totaled 163.7 billion won ($151 million) compared with a 239.9 billion won loss a year earlier. SK Hynix returned to the black in the July-September quarter with a 2 billion won profit following a period of losses due to a slump in chip prices and weak demand.

Revenue was up 6.5 percent to 2.7 trillion won and operating profit totaled 55 billion won.

The company said it benefited from strong demand for chips used in mobile devices and servers, which offset lower demand for chips used in personal computers.

SK Hynix, which competes with bigger rivals Samsung Electronics Co. and Toshiba Corp., supplies chips to Apple Inc., Dell Inc. and Hewlett-Packard Co.

Rising smartphone sales in China and new product launches by its clients during the fourth quarter drove an increase in sales and prices of flash memory chips, Hynix said. The company also benefited from solid sales of affordable tablet PCs in emerging markets.

The stronger South Korean won reduced the value of Hynix’s U.S. dollar debts, resulting in an accounting gain that also boosted the bottom-line.

Global semiconductor companies are bracing for a shift in computing as more consumers and companies turn to mobile devices instead of desktop computers.

Fourth-quarter PC shipments declined by a wider-than-expected margin of 6.4 percent over a year earlier, according to market research firm IDC.

Microsoft’s launch of its Windows 8 operating system at the end of last year did little to reverse the downward trend of PC demand, the research firm said.

Amid doubts about whether PC shipments can rebound, chipmakers have been shifting their focus to chips for smartphones, tablet computers and servers. SK Hynix said demand for smartphones in emerging markets and intensified competition among smartphone makers is expected to increase demand for memory chips for mobile devices.

Because global chip companies are hesitant to raise investment in production lines due to the uncertainty about PC demand and the global economic outlook, a supply increase could be limited and stave off a drastic fall in chip prices, Hynix said.

Samsung Electronics, the world’s largest memory chipmaker, said last week that it will keep its annual capital spending unchanged from the last year, refraining from increasing capital expenditure for the first time in four years.

For 2012, Hynix reported a 159 billion net loss. It had a 56 billion won loss in 2011.