SK Hynix warned on Thursday that demand for chips will remain volatile, while restrictions on global movement, if prolonged, could disrupt production, sales and product development across the industry.
The South Korean chipmaker, which counts Apple among its customers, posted 41 percent drop in quarterly profit as server demand due to the coronavirus-driven shift to working from home partly offset weak smartphone business.
SK Hynix reported an operating profit of 800 billion won ($649 million) in the January to March period, well below an operating profit of 1.4 trillion won a year earlier.
“There are a lot of uncertainties about the outlook for supply and prices for servers in the second half,” Cha Jin-seok, SK Hynix’s chief financial officer, told a conference call.
While the global smartphone market is expected to post a sharper decline this year than last year, the chipmaker said it is positive about demand for servers and PCs as more people are at home, boosting demand for online education, video streaming and e-commerce.
“The biggest factor to our demand forecast is the stablisation of COVID-19 and the recovery timing of global economic activity. If the economic recession is prolonged, we can’t rule out that even memory demand for servers could slow down,” Cha said.
SK Hynix said shipments of DRAM chips, used in smartphones, PCs and servers, to remain flat in the current quarter from the previous quarter.
“Its forecast is lower than the market expected, and SK Hynix will see a bigger impact from coronavirus impact on mobile phones, despite robust server demand,” Park Sung-soon, an analyst at Cape Investment & Securities, said.
Texas Instruments forecast current-quarter earnings largely below Wall Street estimates on Tuesday, while Taiwan Semiconductor Manufacturing trimmed its full-year revenue outlook.
SK Hynix said its first-quarter revenue rose 6 percent to 7.2 trillion won.
SK Hynix’s bigger rival, Samsung Electronics, earlier this month flagged forecast-beating operating profit for the January to March quarter.