Since SK Hynix is the second-largest memory chip manufacturer in the world, its quarterly financial reports are often examined for market trends. SK Hynix’s Q4 2022 results, however, were a reflection of the PC industry’s general downward trend over the second half of 2022.
The South Korean business reported its first operating loss in more than 10 years (dating back to Q3 2012). Reduced demand for memory chips and a sharp decline in memory prices in Q4 added insult to injury for the corporation during its weak quarter. The outcome was a loss of 3.524 trillion won ($2.868 billion), an operational loss of 1.701 trillion won ($1.384 billion), and revenue of 7.699 trillion won ($6.267 billion) for the firm. Despite a 4 percent increase in sales over 2021, operating profit fell 44 percent for the whole year.
With uncertainties still lingering, we will continue to reduce investments and costs, while trying to minimize the impact of the downturn by prioritizing markets with high growth potential.
-Press Release
As major competitors cut down on production and expenditures to better match customer demand, SK Hynix concurs with industry experts that memory chip inventories will peak around the first half of 2023. However, the business added:
Forecasts market conditions to gradually improve into the latter part of the year… 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 was already showing indicators that the fourth quarter would be difficult. The business said that it will cut its capital expenditures in half in October 2022. This decision is reasonable in light of the company’s operational profit decline of 60% year over year for the third quarter of 2022 and the overall decline of 44% disclosed today. SK Hynix is still devoted to investing in “mainstream products,” such as DDR5/LPDDR5 and HBM3, despite the CapEx reductions.
The impact of the investment crisis on SK Hynix’s $11 billion fab in South Korea, which is now under development, was not further discussed. If the company’s anticipated H2 2023 comeback doesn’t materialize, the fab’s original 2025 opening date may be delayed.
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