SK Hynix expects soft server demand after third-quarter profit surge

SK Hynix Chipmakers

SK Hynix, the world’s second biggest memory chip maker, said it anticipated inventory build-up by Huawei’s rivals in China to improve mobile demand in the current quarter, but its mainstay server demand would remain week.

The South Korean firm, which counts Apple and Huawei Technologies among its clients, said Chinese smartphone vendors were building up inventory to gain market share as Huawei confronted US restrictions.

The market for server processors however would remain hard until customers begin to stock up again after this quarter or early next year, ” it included.

DRAM processors took up 72% of SK Hynix’ total revenue in the third quarter, and about 40% of that was server DRAM, according to its earnings document.

SK Hynix agreed in October to buy Intel Corp’s NAND memory chip firm for $9 billion within an all-cash deal, aiming to more than double its NAND revenue in the following five years, in comparison with 2019.

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It aims to leverage the acquisition to scale up and expand in the fast-growing data centre market, CEO Lee Seok-hee advised an earnings call.

SK Hynix has sufficient financial resources to finance the bargain, though sales of its shares in Japan’s Kioxia Holdings are also an alternative, CFO Cha Jin-seok said.

SK Hynix would utilize other means for example cash, borrowing and asset securitisation to finance the purchase, while keeping a cautious investment strategy because of its DRAM company, executives said.

SK Hynix shares were up 1.1% compared to a 0.8percent rise in the wider market. ($1 = 1,131.3600 won)

The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Jonathan Landay. Editing by Steve Orlofsky.

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