SK Hynix posts first operating loss in 10-years

Chipmaker SK Hynix has reported revenue of 44.648 trillion won (+4 percent), operating profit of 7.007 trillion won (–44 percent) and net income of 2.439 trillion won (–75 percent) in 2022.
SK Hynix chip investment in NAND
In 2022, SK Hynix increased high-capacity DRAM shipments for server/PC markets, while boosting sales of DDR5 and HBM to customers in AI, Big Data, and cloud computing. SK Hynix said revenues from the data center SSD business more than quadrupled.

SK Hynix reported a 38 percent drop in revenues to 7.699 trillion won in the fourth quarter.

SK Hynix, the world’s No.2 memory chipmaker, has posted operating loss of 1.7 trillion won ($1.38 billion) and net loss of 3.524 trillion won in the fourth quarter due to weak demand and a drop in the price of memory-chip. This is the first quarterly operating loss for SK Hynix since the third quarter of 2012.

SK Hynix forecasts market conditions to improve into the latter part of the year. Industry experts do not expect an increase in supply of memory chips as market players are planning to reduce investments and production, which will lead the inventories to peak within the first half.

“Intel’s launch of new server CPU adopting DDR5 and apparent positive signs of demand for new AI-based server memory chips bode well for a quick business turnaround,” SK Hynix Chief Financial Officer Kim Woohyun said. “With the world’s best technologies for DDR5 for data centers and 176-layer NAND flash-based enterprise SSD, we expect to see a quick turnaround when the market bottoms out.”

SK Hynix, as announced in October, will more than halve its Capex related investments against 19 trillion won in 2022. SK Hynix will continue its investments for mass production of mainstream products such as DDR5, LPDDR5, and HMB3.

To offload piling inventory, SK Hynix, like other chipmakers, looked to sell chips at modest prices during the fourth quarter, hitting earnings and leading to depreciation in asset value of its NAND Flash chip inventory, analysts said.

With clients wary of buying due to economic uncertainty and opting to use their own inventory instead, data as of the fourth quarter shows it took 46.1 weeks for SK Hynix’s products to be sold from time of production, according to Nam Dae-jong, analyst at eBest Investment & Securities.

On Tuesday, Samsung Electronics, the world’s No.1 memory chipmaker, reported a 69 percent drop in its operating profit.