South Korea’s SK Hynix posted record third-quarter operating profit on Thursday despite softer chip prices, beating expectations thanks to a seasonal sales boost for mobile devices and strong server demand.
The world’s No.2 memory chipmaker said July-September operating profit rose 73 percent year-on-year to KRW 6.5 trillion ($5.7 billion). That compared with a KRW 6.3 trillion average forecast from 19 analysts, according to Refinitiv data.
Sales rose 41 percent to a record high of KRW 11.4 trillion compared to the same period a year ago.
Looking ahead, the company said Chinese consumers’ growing demand for high-density chips for low-end smartphones would help offset the negative impacts of slower DRAM chip price growth and falling NAND flash chip prices
Macroeconomic factors including global trade conflicts would, however, fuel uncertainty around the pace of the slowdown in the DRAM market, it added.
Price falls in memory chips are set to end a two-year super cycle of tight supply and soaring profits for chipmakers around the world, analysts say.
Prices of DRAM memory chips – which help servers, gaming PCs and cryptocurrency mining devices process large amounts of streaming data – would fall about 5 percent in the fourth quarter after jumping about 25 percent since 2016, Taurus Investment and Securities analyst Lee Wang-jin said.
Average prices of NAND flash memory chips, used in smartphones and memory cards, would fall about 9 percent in the fourth quarter, he added.
“Tough times are ahead until roughly the first half of next year, but we will have a clearer picture early next year when chipmakers lay out their investment plans,” Lee said.
SK Hynix’s operating profit would begin to fall year-on-year from the second quarter of 2019, Refinitiv data shows.