© Reuters. FILE PHOTO: A view of the emblem of SK Hynix at its headquarters in Seongnam, South Korea, April 25, 2016. REUTERS/Kim Hong-Ji
By Joyce Lee
SEOUL (Reuters) -South Korean chipmaker SK Hynix Inc mentioned it expects stable demand for server chips to offset weaker progress from private computer systems and cellphones, after its first-quarter revenue greater than doubled from a 12 months in the past.
The world’s second-biggest reminiscence chipmaker on Wednesday posted a 116% bounce in Q1 earnings, supported by stable demand from server shoppers, though it barely missed market expectations due primarily to one-off high quality management prices.
“Firms’ IT spending plans are stable and even rising barely regardless of exterior uncertainties that arose within the first quarter,” mentioned Kevin Noh, SK Hynix’s chief advertising and marketing officer.
“And given some information centre building postponement final 12 months resulting from COVID, we count on server chip demand to be robust in 2022,” he mentioned.
China’s COVID-19 lockdown was the largest threat driving weaker chip demand in cell and private computer systems, the corporate mentioned, however it anticipated a pick-up within the second half as producers ramp up product launches earlier than the year-end buying season.
Shares in SK Hynix have fallen about 15% because the begin of the 12 months, as have these of rivals comparable to Samsung Electronics (OTC:) and Micron Know-how Inc (NASDAQ:), on considerations concerning the impact of China’s COVID-19 lockdown and inflationary pressures on part shortages and shopper demand.
SK Hynix shares had been buying and selling down 2.7% on Wednesday in an general market down 1.1%.
World smartphone shipments fell 11% throughout January-March amid unfavourable financial circumstances and sluggish seasonal demand, analysis firm Canalys mentioned.
EQUIPMENT DELAYS
Supply delays in chip gear brought on by part shortages have hobbled capability expansions and upgrades throughout the chip manufacturing business.
However SK Hynix, by bringing gear in all year long, expects to be roughly according to its authentic capability progress goal by year-end and can try to fulfill buyer demand by enhancing its yield price, Noh mentioned.
Working revenue rose to 2.9 trillion received ($2.3 billion) within the January-March quarter, its highest first-quarter revenue since 2018. This was up from 1.3 trillion received a 12 months earlier however under analysts’ anticipated revenue of three.1 trillion received, in line with Refinitiv SmartEstimate.
Regardless of a slowdown in cell demand, a disruption in February at a rival NAND flash chip plant owned by Japan’s Kioxia and Western Digital (NASDAQ:) resulting from contamination of uncooked supplies led to stable shipments, analysts mentioned.
SK Hynix mentioned it had conservatively booked 380 billion received ($301 million) as a one-off price to compensate clients of DRAM chips made in mid-2020 which had been discovered to have high quality points when used intensely for over a 12 months.
The corporate mentioned it expects the reminiscence chip business to proceed to develop this 12 months on server demand, because the reminiscence chip business’s volatility and cyclicality seems to have lessened.
Prospects have discovered to lock in quantity at year-end and construct up security inventory throughout the previous two years’ provide disruptions, executives mentioned on an earnings name. SK Hynix, in the meantime, has targeted on profitability by making fewer merchandise which can be delicate to shoppers’ enterprise fluctuations, they added.
Income climbed 43% on-year to 12.2 trillion received.
($1 = 1,261.0000 received)