Operating Income Surges 143% QoQ
SK hynix Inc. announced on July 23 financial results for its second quarter 2020 ended on June 30, 2020. The consolidated revenue of second quarter 2020 was 8.607 trillion won while the operating profit amounted to 1.947 trillion won, and the net income 1.264 trillion won. Operating margin for the quarter was 23 percent and net margin was 15 percent.
Despite uncertainties of business environment due to COVID-19, both the company’s revenue and operating income increased by 20 percent and 143 percent quarter-over-quarter (QoQ), respectively, as the surging demand for server memory maintained favorable memory price while numerous factors including the increase of the main products’ yield rate led to cost reduction.
For DRAM, although weak demand of mobile customers continued, SK hynix managed to expand sales of both server and graphics products as demand and price of these markets remained stable. Consequently, both DRAM bit shipment and average selling price increased by 2 percent and 15 percent QoQ, respectively.
For NAND Flash, SK hynix proactively responded to the demand for SSD products. With the favorable price flow of the market, the Company’s SSD business accounted for nearly 50 percent of its NAND Flash business for the first time. As a result, the NAND Flash bit shipment and average selling price increased by 5 percent and 8 percent QoQ, respectively.
Regarding business environment in the second half of this year, SK hynix sees uncertainties due to COVID-19 and the global trade dispute. However, it anticipates 5G smartphones and next-generation gaming consoles which are scheduled for launching will stimulate component demand growth, as the economic activities of major countries partially reopen.
Accordingly, SK hynix will focus on profitability-oriented product management based on the competitiveness of its product quality, while maintaining the conservative plan for capital expenditure and capacity operation as suggested in the previous quarter.
For DRAM, SK hynix will expand 1Ynm mobile DRAM sales in order to improve profitability, and timely supply LPDDR5 DRAM products to the market which has begun the full-fledged adoption of this product. At the same time, the Company will focus on expanding the sales of high-capacity server products larger than 64 Gigabytes (GB), and proceed with the full-scale mass-production of 1Znm DRAM products.
For NAND Flash, the Company will not only respond to both mobile and gaming console demand, but also diversify the customer portfolio to enhance server products business competitiveness. Specifically, SK hynix will expand the customer qualification of 128-layer NAND Flash products in order to ensure continuous improvement of profitability.
Cha Jin-seok, vice president and head of finance (CFO) at SK hynix, stated, “SK hynix will flexibly cope with changes in the external business environment, and prepare the foundation for sustainable growth in the second half of the year.”