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Thu, Oct 23, 2003 - Page 12 News List

Hynix has first profit in six quarters

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Hynix Semiconductor Inc, the world's third-biggest maker of computer memory chips, reported its first profit in six quarters after surging sales narrowed the operating loss at its South Korean factories.

Hynix, bailed out by Korea Exchange Bank and other creditors three times in three years, turned to consolidated net income of 133.9 billion won (US$113 million) from a loss of 490 billion won a year ago. The Seoul-based company said sales, which trailed domestic rival Samsung Electronics Co and Germany's Infineon Technologies AG, jumped 52 percent to 990 billion won.

"As long as DRAM prices stay at this level they are generating cash," said Del Ricks, the head of electronics research at Dong won Securities in Seoul. "Clearly Infineon and Samsung are well ahead, but at least Hynix is in the ball park."

Hynix, whose 11.5 trillion won of debt at the end of 2000 brought the company to the brink of bankruptcy, is benefiting from the first signs that consumers and companies are replacing computers, ending a slump in sales of dynamic random access memory chips. Samsung Electronics was the only company among the 10 largest companies in the US$16 billion industry to report a profit at its memory-chip operations in the past quarter.

Hynix's unconsolidated operating loss -- which reflects operations only at its Korean units -- narrowed to 24 billion won from 511 billion won in the third quarter.

"Operating conditions seemed to have turned favorable for Hynix as the DRAM price rose," said Chin Yeong Hoon, a semiconductor analyst at Daishin Securities Co in Seoul. "The spot price of the benchmark chip will rebound up to US$5 until mid-November."

The spot price of the benchmark 256-megabit, 266-megahertz double-data-rate dynamic random access memory chip averaged US$4.65 in the third quarter, compared with US$3.31 in the second quarter, according to Taiwan-based online marketplace Dramexchange.com.

Analysts estimate chipmakers can post profit when the price is above US$4.

Samsung, the largest maker of DRAM chips which act as the main memory for personal computers, said it expects chip prices to rise slightly in the current quarter, when it reported earnings last Friday.

Hynix didn't report unconsolidated profit for the third quarter as it did for the two previous quarters this year. The consolidated figure included 124 billion won of profit from its Eugene, Oregon plant and overseas distribution units.

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