SK Hynix books record profit

South Korea's SK Hynix Inc on Tuesday booked record quarterly profit due to strong demand for high-tech memory chips, and said the DRAM supply shortage that has pushed up prices will continue throughout 2017. The extent of the shortage is likely to ease toward the end of the year, stabilising prices somewhat, but demand will keep rising due in part to the continued spread of cloud computing, SK Hynix said on an earnings conference call.
The results are the industry's first in a year when analysts expect earnings records thanks to a so-called supercycle in which demand for smaller, more sophisticated chips for servers and smartphones far outstrips production capacity. That has pushed up chip prices and widened profit margins. Overall industry revenue this year is likely grow 32 percent to a record $104 billion, showed data from researcher IHS.
"This is a supercycle that's never been seen before. It'll be very easy (for SK Hynix) to exceed $5 billion in monthly revenue this year," said analyst Hwang Min-seong at Samsung Securities. "Since there is little additional clean room space (chip production facilities) becoming available until 2019, such a trend is seen continuing next year as well." The world's second-biggest maker of all major types of memory chips, behind Samsung Electronics Co Ltd, also said it will stick to short-term capital expenditure plans for NAND chips regardless of whether rival Toshiba Corp sells its chip business.