Korean memory chip producers are expected to enjoy a booming business during the remainder of this year as global DRAM chip demand is likely to surpass supply.
The rosy forecast was presented by SK hynix, Korea’s No. 2 chipmaker, in a conference call it hosted on April 24 after disclosing its first-quarter performance.
The chipmaker estimated global DRAM demand growth for this year at low-20 percent, saying that despite chip producers’ increased investment in production plants, supply would still fall short of demand.
The growth in the DRAM market will be led for the time being by the continuing surge in demand for server products that started last year, SK hynix said. Memory chips for servers are in high demand as Internet data-center operators are expanding investment around the globe.
The emergence of new services based on AI and IoT is also fueling demand for memory products as they run on large-capacity servers.
SK hynix said server products account for a relatively large share in its sales compared with other chipmakers, adding that server products would overtake mobile products in its sales revenue next year.
The company forecast demand for NAND flash products would increase by mid-40 percent this year, double the rate of DRAM chips. But it said supply shortage would ease as supply would increase at a similar rate.
In the first quarter, SK hynix earned 3.1 trillion won (US$2.89 billion) in net profit, an increase of 64.4 percent from 1.89 trillion won posted a year earlier. The figure marked the company’s second-highest quarterly earnings for Q1.
The company’s operating profit surged 77 percent from a year ago, boosting its operating profit-to-sales ratio, a measure of a company’s profitability, to 50.1 percent. It was the first time in the company’s history that the ratio surpassed the 50 percent mark.
SK hynix plans to accelerate the construction of a new factory in Cheongju, 137 kilometers south of Seoul, and the expansion of its Chinese line to cope with the rising demand for memory chips.