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Hynix Semiconductor, the world’s second-largest memory chipmaker, reported a slight fall in third-quarter profit from a year ago, due to weaker chip prices.

Like other global chipmakers, the South Korean company has suffered this year from falling prices of dynamic random access memory (D-ram) chips amid a supply glut.

Compared with the previous quarter, however, third-quarter earnings more than doubled, as D-ram prices slightly rebounded and shipments of NAND flash memory chips, used in digital consumer electronics, surged.

“The results improved quarter-on-quarter, helped by higher D-ram prices on the back of revived seasonal demand, the rapid growth of NAND flash memory sales, and cost-reduction due to improved productivity,” the company said in a statement on Thursday.

The South Korean chipmaker posted net profit of Won511.5bn (US$490m) in the July-September period, down 3.5 per cent from a year ago, but up 114.6 per cent from the second quarter.

The company also attributed increased quarterly profit to investment gains from its overseas affiliates and the sale of its stake in Hyundai Autonet, a car parts maker.

Hynix’s sales fell 3.3 per cent to Won1,492bn year-on-year but rose 20.9 per cent quarter-on-quarter. Hynix said its shipments of NAND flash memory chips jumped 80 per cent from the previous quarter, offsetting continued price pressure, while its D-ram shipments rose only 3 per cent.

Productivity is improving constantly at the chipmaker, as it expands wafer capacity to 25,000 units per month at its 300mm production line in Ichun, South Korea.

But analysts said Hynix’s earnings would by affected by a downward trend in the sector until mid-2006, citing still weak D-ram prices and potential margin contraction in NAND flash.

“We expect sharply reduced growth in the NAND market in 2006-07 and D-ram prices will remain weak until mid-2006 at least,” JP Morgan said in a report.

Hynix has become one of the most cost-efficient chipmakers, in spite of several years of under-investment because of financial problems. It got back on its feet in July by completing a debt-restructuring programme.

Creditors plan to sell a 23.4 per cent stake in the chipmaker by issuing global depositary shares and through a block sale in the domestic market by the end of November.

Copyright The Financial Times Limited 2017. All rights reserved.
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