A drop in prices of memory semiconductors lowered SK Hynix’s operating income in the second quarter of this year to the lowest in 13 quarters. Despite low earnings, the semiconductor company is planning to rebound by making an investment of 3 trillion won (US$2.6 billion) and concentrating on the growth of the 3D NAND flash business in the second half of this year.
On July 26, SK Hynix announced that they posted 3.94 trillion won ((US$3.42 billion) in sales and 452.9 billion won (US$393.8 million) in operating profit in the second quarter of this year, up 15% and 67%, respectively from a year earlier. SK Hynix chalked up over one trillion won in operating income for seven consecutive quarters until the third quarter of 2015. But since the fourth quarter, the company has failed to do that. Notably, its operating income in the second quarter of this year fell below 500 billion won in 13 quarters.
This poor performance is attributable to the fact that prices of memory semiconductors, in particular, DRAMs continued to slide. Demand for DRAMs, mainly those for PCs. significantly declined, prices of DRAMs continued to fall for nearly 20 months.
SK Hynix began to rebound in the third quarter of this year based on aggressive investment. “There is no big change in our overall facility investment of this year,” SK Hynix said in a conference call after its earnings announcement. “We expect the investment volume to stand at six trillion won, down about 10% from a year before.”
“About 50% of the investment was made in the first half of this year and about three trillion won will be invested in the second half,” the company added.
In particular, the company disclosed an additional investment plan for 3D NAND flashes. “When we complete a production capacity of about 30,000 NAND units within this year, we will need additional space. Thus, we will work on securing NAND production space in the second half of this year,” said a representative of SK Hynix.
“When we secure space for NAND production in the first half of this year, we will go ahead with additional investment in 3D NAND,” he added. “NAND investment will account for 30% to 35% of the entire investment of next year.” SK Hynix is planning to produce more than 50% of entire NAND flashes as 3D NAND flashes late next year.