ajunews Wednesday,21 February 2024

SK hynix suffers huge operating loss due to slumping memory chip business

By Park Yoon-bae Posted : February 1, 2023, 14:50 Updated : February 2, 2023, 01:45

[Courtesy of SK hynix]


SEOUL -- SK hynix, the world’s second-largest memory chip producer, suffered an operating loss of 1.7 trillion won ($1.37 billion) in the fourth quarter of last year, driven by sagging global demand amid an economic slowdown, the company said February 1. 
 
It marked the first time since the third quarter of 2012 that the company has posted an operating loss. The loss was in stark contrast to a profit of 4.21 trillion won in the last quarter of 2021.
 
The company’s sales nosedived 37.8 percent year-on-year to 7.69 trillion won in the October-December period of 2022. Its net loss was estimated at 3.52 trillion won, compared with a profit 3.31 trillion won a year before.
 
The earnings shock was due to a sharp fall in memory chip prices amid sluggish demand for PCs and smartphones.
 
The disappointing results came a day after Samsung Electronics, the world’s largest memory chip and smartphone maker, announced that its operating profit plunged 69 percent to an eight-year low of 4.3 trillion won in the fourth quarter of 2022. Samsung’s operating profit from the semiconductor division tumbled 96.6 percent to $270 billion.
 
SK said its annual sales increased 3.8 percent to 44.64 trillion won last year, while posting 7.66 trillion won in consolidated operating profit, down 43.5 percent from 2021. Its annual net profit plummeted 74.6 percent to 2.23 trillion won.
 
“Our operating profit fell because the semiconductor industry continued to undergo a slowdown in the second half of last year, despite the sustained growth trend in our sales,” the company said. It added that SK hynix is making efforts to minimize the fallout of the slumping business.

Unlike Samsung that has no plan to cut investments or production this year, SK said that it will reduce investments and costs to cope with growing uncertainties.
 
SK reaffirmed that its investments this year will be reduced to the 50 percent level of last year’s 19 billion won. The company came up with the reduction plan last October to tackle declining demand for memory chips.
 
The earnings shock was much greater for SK because memory chip production accounts for 90 percent of its entire business. Some industrial analysts predict that the company will post an operating loss of over 5 trillion won in 2023 as the memory chip slump is expected to continue at least in the first half of the year.
 
 
 

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