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South Korea memory firms post Q1 profit drops

Posted: 28 Apr 2009 ?? ?Print Version ?Bookmark and Share

Keywords:South Korea memory? NAND flash? DRAM?

South Korea's Hynix Semiconductor Inc. posted consolidated revenues of 1.31 trillion won ($978.2 million) in Q1, down by 13 percent compared to the previous quarter.

Net loss for the quarter amounted to 1.18 trillion won ($881.2 million), from 1.69 trillion won ($1.3 billion) in the previous quarter.

Hynix' DRAM bit shipment growth declined by 2 percent q-on-q and ASPs dropped by 7 percent. NAND flash bit shipment growth declined by 4 percent q-on-q and ASPs increased by 10 percent.

Rival Samsung Electronics Co. Ltd saw a 72 percent drop in quarterly profit.

"The commentary from both Hynix's and Samsung's management, in our view, can be characterized as overly 'cautious,' compared to the rest of the tech names that have already reported/had their conference calls," according to a report from FBR.

"Both companies said there remain uncertainties regarding sustainability of the improvement from the PC/handset food chain. NAND flash demand is currently strong due to capacity allocation to Apple for the introduction of its new iPhone in the summer time frame," according to the report. "But, both Hynix and Samsung also said they could convert DRAM capacity into NAND, and that their capex plans for the remainder of the year are very flexible."

There are other issues for Hynix. "One notable takeaway is that Hynix had planned to spend 70 percent of its 1 trillion won CY09 capex in 2H, but is not placing any orders (into equipment vendors) until late Q2 due to lack of visibility," it said.

"A majority of NAND flash capacity (at Hynix) is currently at 48nm, though 41nm production will start in Q2. DRAM is currently at 54nm and is expected to migrate below 50nm in 2H 09," according to the report. "NAND bit shipment (for Hynix) is expected to increase by 30 percent in CY09, above the industry average of up 10 to 20 percent. Hynix DRAM inventory is at 2.5 weeks, and NAND is at 1.5 weeks."

There are issues at Samsung as well. "The company was more cautious than Hynix, primarily due to lack of visibility into the end-market demand. Samsung noted that the strength in Q1 was primarily driven by the emerging markets and that demand from the U.S. and Europe would need to pick up more to sustain the demand improvement," according to the report.

"The company believes that the recent memory ASP increase so far, year to date, is driven by cutbacks in supply (especially in Taiwan) and that ASP increases for the remainder of the year could be limited. Similarly to Hynix, Samsung is also seeing strong NAND demand from Apple, and it expects industry NAND bit growth of 30 percent in CY09, quite a bit higher than Hynix's projections," according to the report.

"What is interesting to note is that Samsung does not expect contract prices to appreciate much above the current levels, as perceived elasticity may not materialize. Samsung did not disclose its CY09 capex budget; it stated that it reviews its capacity requirements on a monthly basis and that POs do not need to be issued in advance, given the short lead times offered by equipment vendors. DRAM is currently at 51nm, while NAND flash is at 42nm," according to the report.

- Mark LaPedus
EE Times





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