Forecasts of SK Hynix's performance in the first quarter are deteriorating. Up until January this year, there were predictions that its operating profit would be around $2.5 billion (2 trillion won), but after being lowered sequentially, it fell to $1.3 billion (1 trillion won) in just two months.
As prices of DRAM semiconductors, which are major products, continue to decrease, its profit ratio seems to be falling rapidly. Some predict that its operating profit will fall below 1 trillion won to 470 billion won in the second quarter.
According to an analysis on the average of the eight securities companies that Chosun Biz reported in March, SK Hynix is expected to make 1.3 trillion won in operating profit in the first quarter of this year on a consolidated basis. It is estimated that its operating profit ratio will be 21.5 percent with 6.27 trillion won in sales during the same period.
This figure is a 71% decrease from the operating profit (4.43 trillion won) in the fourth quarter of last year. Profits are decreasing sharply since the third quarter of last year (6.47 trillion won). It is predicted that sales will also decrease by 3.6 trillion won compared to the fourth quarter of last year (9.93 trillion won).
The biggest reason for its poor performance is the drop in DRAM prices. According to the Export-Import Price Index released by the Bank of Korea on March 15, export prices for DRAMs in February fell by 6.9 percent from January. It has fallen for the seventh consecutive month since last August. D-RAM Exchange, a market research company that specializes in semiconductors, predicted that fixed transaction prices for PC D-RAMs in the first quarter of this year will fall by 30 percent from the previous quarter.
The problem is that the trend could continue for a while. It is predicted that Hynix's average operating profit for the second quarter will be 1.02 trillion won, down 21 percent from the first quarter. As oversupply continues until the second quarter, SK Hynix's annual operating profit this year is estimated to be about 5 trillion won.