SK Hynix sees solid demand for server chips offsetting weaker mobile, PC demand
By Joyce Lee
SEOUL (Reuters) -South Korean chipmaker SK Hynix Inc stated 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% leap 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.
“Corporations’ IT spending plans are stable and even rising barely regardless of exterior uncertainties that arose within the first quarter,” stated Kevin Noh, SK Hynix’s chief advertising officer.
“And given some knowledge centre development postponement final 12 months as a consequence of COVID, we anticipate server chip demand to be sturdy in 2022,” he stated.
China’s COVID-19 lockdown was the largest threat driving weaker chip demand in cell and private computer systems, the corporate stated, however it anticipated a pick-up within the second half as producers ramp up product launches earlier than the year-end procuring season.
Shares in SK Hynix have fallen about 15% for the reason that begin of the 12 months, as have these of rivals similar to Samsung Electronics and Micron Expertise Inc, 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%.
International smartphone shipments fell 11% throughout January-March amid unfavourable financial situations and sluggish seasonal demand, analysis firm Canalys stated.
EQUIPMENT DELAYS
Supply delays in chip tools brought on by part shortages have hobbled capability expansions and upgrades throughout the chip manufacturing trade.
However SK Hynix, by bringing tools in all year long, expects to be roughly in step with its authentic capability progress goal by year-end and can try to satisfy buyer demand by enhancing its yield price, Noh stated.
Working revenue rose to 2.9 trillion gained ($2.3 billion) within the January-March quarter, its highest first-quarter revenue since 2018. This was up from 1.3 trillion gained a 12 months earlier however under analysts’ anticipated revenue of three.1 trillion gained, based on 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 as a consequence of contamination of uncooked supplies led to stable shipments, analysts stated.
SK Hynix stated it had conservatively booked 380 billion gained ($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 stated it expects the reminiscence chip trade to proceed to develop this 12 months on server demand, because the reminiscence chip trade’s volatility and cyclicality seems to have lessened.
Clients have discovered to lock in quantity at year-end and construct up security inventory through the previous two years’ provide disruptions, executives stated on an earnings name. SK Hynix, in the meantime, has targeted on profitability by making fewer merchandise which are delicate to shoppers’ enterprise fluctuations, they added.
Income climbed 43% on-year to 12.2 trillion gained.
($1 = 1,261.0000 gained)
(Reporting by Joyce Lee; Enhancing by Richard Pullin)
