Wed, Dec 22, 2010 - Page 10 News List

Hynix says fall in memory prices will hit its Q4 profit


South Korea’s Hynix Semiconductor says it expects computer memory-chip prices to fall further early next year and hit its fourth-quarter results this year.

“Chip prices remained strong until the first half of this year, but they dropped sharply, especially during the fourth quarter,” chief executive O.C. Kwon told The Wall Street Journal in an interview.

“Due to the sharper than expected fall, a considerable decline in both our sales and profit is inevitable in the fourth quarter,” he said.

Hynix, the world’s second-largest memory chipmaker, supplies chips known as dynamic random access memory (DRAM) to Hewlett-Packard and other major computer makers.

It also makes NAND flash-memory chips — which are used to store data in gadgets even when power is switched off — to Apple and Nokia.

Over the past six months, the average spot price of the most widely used DRAM chip has more than halved to US$1.95 each, according to DRAMeXchange, an online chip clearing house based in Taiwan.

Hynix announced a record net profit in the third quarter of 1.06 trillion won (US$916.9 million) and a 53 percent rise in revenue to 3.25 trillion won.

Next year, Kwon said it would target revenue of more than 10 trillion won, but cautioned that the strong won might depress earnings.

Kwon said chip prices could start bottoming out as early as the first quarter of next year, as demand starts to pick up amid lower component prices and a continuing recovery in the global economy.

Global chip demand and supply will likely balance out in the second half of next year, he said.

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