Hynix profit hits record on D-ram chips

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Hynix Semiconductor, the world’s second-largest memory chipmaker, on Wednesday reported a record net profit for 2006, driven by strong prices of D-ram chips.

Net profit at the South Korean chipmaker rose 11 per cent to Won2,055bn ($2.2bn) last year, as sales jumped 30 per cent to Won7,693bn. The figures include performance of the company’s overseas subsidiaries.

Hynix also reported a record quarterly profit in the October-December period on seasonal demand. Net profit surged 35 per cent to Won1,015bn in the fourth quarter, with sales jumping 52 per cent to Won2,656bn.

The company attributed the strong performance to its expansion of 300mm production capacity including its M10 production line in Ichon, South Korea , and its Chinese joint venture with STMicroelectronics.

“During the fourth quarter, a favourable market condition continued for D-ram. Demand was especially strong from PCs as more Vista-ready PCs are sold, while supply was still tight, which we believe was due to the unresolved technology migration issues at some of our competitors,” the company said in a statement.

Hynix’s average selling price for D-ram chips in the fourth quarter rose 9 per cent from the previous quarter and shipments jumped 31 per cent. But prices for Nand flash memory chips fell 11 per cent amid continued oversupply, although shipments increased 27 per cent.

Overall, the company reported operating profit margins of 33 per cent in the fourth quarter - one of the highest in the memory chip industry. But the outlook for Nand flash memory chips remains bleak this year, with Hynix predicting a 50-60 per cent price fall.

The company plans to accelerate the growth momentum in 2007 through increased investment. The company has earmarked Won4,400bn for this year’s capital expenditure, slightly up from last year’s Won4,300bn.

Hynix had planned to invest about Won13,500bn in three fabrication lines in Ichon, some 80km south of Seoul, by 2010, but the government recently disapproved the construction of the new plants in the metropolitan area due to concerns over environmental impact and economic concentration. Hynix is expected to look elsewhere for the new lines.

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