Until the moment of truth, which is usually quarterly reports, company representatives and management usually ooze optimism. When it comes time to talk about the results of work during the next reporting period, you have to be honest with investors and journalists. The SK Hynix company behaved in exactly the same way in this regard. Just recently, the management of this South Korean manufacturer of NAND and DRAM memory assured that there were no visible prerequisites for a further significant reduction in memory prices. But today, during a report on work in the first quarter of 2019, the company announced that the reduction in memory prices turned out to be stronger than expected.
ΠΠ°ΠΊ in the company, consolidated revenue for January-March 2019 amounted to 6,77 trillion won ($5,88 billion), operating profit reached 1,37 trillion won ($1,19 billion), and net profit amounted to 1,1 trillion won ( $960 million). Operating profitability of production was 20%, and net profitability was 16%. As memory prices fell more than expected and demand for memory did not increase, revenue and operating profit in the first quarter decreased sequentially (on a quarterly basis) by 32% and 69%, respectively. Compared to the results of a year ago, these figures fell by 22% and 69%. The company's net income fell 65% for the year and fell 68% for the quarter. Operating profitability fell by more than half.
Seasonality and sluggishness in the server market led to a 27% decrease in the average sales price for memory and an 8% decrease in memory shipments per capacity. In the NAND market, average selling price fell 32% and shipments per capacity fell 6% in the quarter. Declining revenue from production activities is forcing the company to focus on technological development rather than production.
Firstly, SK Hynix promises to increase the proportion of memory production using the 1Xnm process technology. This is the first generation of the 10 nm class process technology. Samsung, by the way, is already moving to the third generation of DRAM production with 10 nm class standards. SK Hynix plans to begin supplies of 1Ynm-class memory in the second half of this year. This will mainly be memory for computers and servers. In particular, it is promised to focus on the release of server memory modules with a capacity of 64 GB.
In the production of NAND flash, the company is going to eliminate the production of 3D NAND with 36 and 48 layers as it is relatively expensive to produce. Instead, the proportion of production of 72-layer 3D NAND will be increased. The company will begin producing 96-layer memory, which SK Hynix's competitors are already producing, in the second half of the year. To solve the problem of low demand and falling prices, a full-scale launch of a new enterprise for the production of NAND plant in Korea will be delayed until the second half of the year. This and other "containment" measures should reduce the company's overall NAND wafer production by 10% or more compared to last year. The company promises to focus on cost savings and improving competitiveness.
Source: 3dnews.ru