Hynix Semiconductor Inc. (000660), the world’s second-largest maker of computer-memory chips, reported a 34 percent drop in second-quarter profit after slowing personal-computer sales drove down chip prices.
Net income fell to 473 billion won ($448 million) from 718.7 billion won a year earlier, Ichon, South Korea-based Hynix said today in a statement. That compares with the 417.8 billion won average of 21 analyst estimates compiled by Bloomberg.
Hynix, on sale by its creditors, joins Micron Technology Inc. (MU) in reporting a slump in profit as demand for consumer electronics products slows. Chip sales in the third quarter may remain weak as consumers delay purchases of electronics goods amid a slow global economic recovery and a debt crisis in Europe, the chipmaker said.
“The market’s expectations for the third quarter are already pretty low,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $29 billion. “Chip prices are continuing to fall in July,” he said.
Hynix fell 1.2 percent to 23,900 won at 12:25 p.m. in Seoul, while the benchmark Kospi index declined 0.7 percent.
Operating profit, or sales minus the cost of goods sold and administrative costs, declined 56 percent to 446.9 billion won and sales fell 16 percent to 2.76 trillion won.
Intel Forecast
The price of the benchmark DDR3 2-gigabit DRAM fell 30 percent in the second quarter, according to data from Taipei- based Dramexchange Technology Inc., operator of Asia’s largest spot market for semiconductors.
Global personal-computer shipments rose less than forecast in the second quarter amid a sluggish economy and consumer preference for smartphones and tablet computers, according to IDC and Gartner Inc. (IT)
Chip demand will continue to shift toward mobile devices and servers from PCs, Shin Hyun Joon, an analyst at Dongbu Securities Co. wrote in a July 5 report. Sales of DRAM chips for servers needed to deliver computing, software and storage over the Internet may grow 77 percent, while demand for semiconductors for mobile devices may rise 88 percent this year, Shin wrote.
Intel Corp. (INTC), the world’s biggest chipmaker, yesterday forecast third-quarter revenue may be $14 billion, exceeding the $13.5 billion average estimate compiled by Bloomberg, buoyed by corporate computer upgrades and first-time purchases by consumers in emerging markets.
Price Pressure
Still, supply of chips for mobile devices and servers may outpace growth in demand, damping profit margins, said Seo Won Seok, an analyst at NH Investment & Securities Co. in Seoul.
At the end of the second quarter, about 70 percent of Hynix’s DRAM products were for non-PC devices, the company said.
“Price pressure’s increasing for the non-PC DRAM segment too,” Park Seong Hwan, head of the investor relations team at Hynix, said during a conference call today.
Hynix shareholders led by Korea Exchange Bank (004940) are seeking to sell all or part of their 15 percent stake in the chipmaker, with SK Telecom Co. and STX Group having submitted preliminary bids. The deal may be the largest share sale of a South Korean technology company since July 1999, when Hynix bought a majority holding in Hyundai Microelectronics Co. for 2.56 trillion won, according to data compiled by Bloomberg.