SK Hynix Inc., the second largest DRAM producer in the world, announced on July 25 that it would cut back DRAM production starting from the fourth quarter of this year, following Samsung Electronics Co.
The company also said it is planning to increase its NAND flash wafer input cut from 10 percent in the first quarter to more than 15 percent from now on to defend the price of memory chips through output reduction.
This came after SK Hynix disclosed its second-quarter earnings results. Sales totaled 6.45 trillion won (US$5.46 billion) in the second quarter, down 38 percent from a year ago, while operating profits came to 637.60 won billion (US$539.65 million), a whopping 89 percent decrease. In particular, the profit figure was as much as 11.4 percent lower than the market consensus of 720 billion won (US$609.39 million).
One force behind SK Hynix’s decision to reduce DRAM production is the slow stock-out of products for servers and the economic slowdown due to uncertainty in the mobile market stemming from the trade dispute between the United States and China.
SK Hynix plans to convert part of the DRAM fab lines at the M10 plant in Icheon, east of Seoul, to CMOS image sensor (CIS) lines in the second half to decrease DRAM output until next year. For NAND which recently shows stable prices, the firm will decrease the wafer input by more than 15 percent this year, up from its earlier plan to decrease it by 10 percent.
Previously, Micron Technology Inc. also decided to reduce DRAM wafer input by 5 percent and NAND by 10 percent.