SK hynix: Fiscal 2Q23 Financial Results

Highlights:

• Revenue at 7.306 trillion won (KRW), operating loss at 2.882 trillion won, net loss at 2.988 trillion won
• Revenue rises; operating loss narrows on increased sales of premium products such as HBM3, DDR5
• “Memory industry in recovery phase … We aim to accelerate earnings improvement by strengthening competitiveness in AI memory market“

SK hynix Inc. reported financial results for the second financial quarter of 2023. 

It recorded revenue of 7.306 trillion won, operating loss of 2.882 trillion won (with operating margin of negative 39%), and net loss of 2.988 trillion won (with net margin of negative 41%) for 2FQ23.

Operating margin in 1H23 was -67% in 1FQ23 and -39% in 2FQ23.

“Amid an expansion in generative AI market, which has largely been centered on ChatGPT, demand for AI server memory has increased rapidly,” the company said. “As a result, sales of premium products such as HBM3 and DDR5 increased, leading to a 44% sequential increase in revenue for 2Q23, while operating loss narrowed by 15%.”

According to the manufacturer, sales of both DRAM and NAND products increased in 2Q23, with higher ASP of DRAM largely contributing to revenue growth. Although the price for general DRAM products such as DDR4 continued to decline on sluggish PC and smartphone demands, DRAM blended ASP rose in 2Q23, offset by increased sales in high-end products used for AI servers.

Moreover, lower inventory valuation loss, as well as the company’s ongoing cost reduction efforts, helped reduce operating loss.

At the quarterly earnings conference call, the company said the demand for AI memory will continue to stay robust, and that a clearer effect of production reduction by memory companies can be seen.

SK hynix, thereby, aims to expand sales of high-end DRAM products, including HBM3, DDR5 and LPDDR5, as well as 176-layer based SSD products, which would help accelerate earnings improvement.

The company also announced that it will improve the quality and yields of 1b-nanometer, the 5th gen of the 10nm process technology, DRAM and 238-layer NAND this year and expand the scale of mass production once the industry upturn is visible. But, given that the inventory levels of NAND is higher than DRAM, the company has decided to further reduce NAND production.

“The company’s stance on consolidated investment, which is to reduce that by at least 50% compared to 2022, remains unchanged, but with resources secured by management efficiency, we will continue to invest to expand the production capacity of high-density DDR5 and HBM3 that will lead future market growth,” said Kim Woohyun, VP and CFO.

“Having passed the trough in the first quarter, the memory semiconductor market is seen to have entered the recovery phase,” he said. “SK hynix will strive to prop up earnings through its technological competitiveness in high-end products.”