SK Hynix triples operating profit thanks to coronavirus pandemic

SK Hynix triples operating profit thanks to coronavirus pandemic


Memory manufacturers found themselves in a favorable situation during the inception and in the first quarters of the spread of the SARS-CoV-2 coronavirus. Quarantine, self-isolation, and remote work have led to increased demand for remote computing platforms and increased consumption of computer memory. SK Hynix, as it turned out in the course of the quarterly report, was able to triple its quarterly operating profit over the year.

According to SK Hynix’s quarterly report released this morning, the company generated 8.607 trillion won ($ 7.2 billion) in the second calendar quarter of 2020. Its operating income was 1.947 trillion won ($ 1.63 billion) and net income was 1.264 trillion won ($ 1.06 billion). The uncertainty of the business environment caused by the coronavirus did not prevent SK Hynix from consistently (quarterly) increasing its revenues by 20% and operating profit by 143%. Over the year, quarterly operating income has tripled.

Note that it was not only the coronavirus that helped to improve the financial performance of SK Hynix, but also an increase in product yield (a decrease in the level of defects in memory production) and a concomitant decrease in cost.

Weak demand for smartphone memory has been more than offset by strong demand for server and graphics memory. The company’s DRAM production growth in the second quarter was 2% in terms of capacity, while it recorded a 15% increase in the average selling price of memory.

In the NAND flash memory business, production volumes per bit increased 5% and the average selling price rose 8%. The company also announces that it has achieved a record result: for the first time, the SK Hynix branded SSD business brought more than 50% of the revenue in the production of NAND-flash and products based on it.

SK Hynix Q2 2020 Financial Performance

SK Hynix Q2 2020 Financial Performance

In the second half of the year, the company expects continued uncertainty due to the coronavirus and trade wars, but the release of new consoles and the proliferation of 5G networks gives it confidence in a good scenario for the memory business.

SK Hynix’s production plans include expanding the supply of mobile 10nm DRAM, including the most advanced LPDDR5 DRAM. In the field of server memory, the company intends to offer modules with a capacity of more than 64 GB, which will be helped by a further transition to the production of DRAM chips with 10 nm class standards of the 1Znm generation. For NAND chips, the company will focus on 128-layer 3D NAND chips, which will have a positive impact on profitability. Overall, SK Hynix exudes optimism. Let’s see how it will actually be.

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