SK Hynix Q1 net profit increases by 50% DRAM supply will be tight throughout the year

The company's Q1 revenue was 8.49 trillion won (about 49.5 billion yuan), up 18% from the same period last year and 7% from the fourth quarter of last year. Operating profit was 1.32 trillion won (expected 1.29 trillion) and net profit was 993 billion won. Driven by reduced expenses, both indicators rose by more than 50% year-on-year, and operating profit margin also rose to 16%.

In addition, for the 44% month-on-month drop in net profit, the company explained that the increase in valuation included in the investment Kioxia in the fourth quarter of last year boosted the base.

The tight supply of DRAM will last for the whole year.

In terms of specific business, SK Hynix's DRAM (dynamic random access memory) shipments increased by 4% in the first quarter compared with the previous quarter, while NAND flash memory shipments surged 21% from the previous quarter.

In terms of supply chain expectations, which are of more concern to the market, the company expects that the current strong demand growth across the IT market will continue, so the inventory of downstream customers will decline rapidly, the tight supply situation of DRAM is expected to run through the whole year, and the demand for NAND will increase faster than expected. The company said in its financial report that it will "actively respond to the market environment" and will increase capital investment in the second half of the year.

In terms of technological progress, SK Hynix plans to supply high-capacity 12GB DRAM-based polychip modules and increase the production capacity of 1Znm (third-generation 10nm process) DRAM from the second quarter, while 1Anm technology using deep ultraviolet lithography machine is expected to complete research and development and put into mass production within this year. In the field of NAND flash memory, the company will increase the production of 128layer products to increase enterprise SSD sales and achieve mass production of 176layer products by the end of the year through existing technology.

For the prospect of SK Hynix, Yuanta Securities analyst Lee Jaeyun stressed that the upward trend in the memory chip industry will continue. Lee said that the hoarding of PC and mobile memory chips that began in the fourth quarter of last year continued to this year, with the tight supply of server DRAM, further accelerating the price increase of chips. In early April, Meguiar Technology also said that the price of DRAM was rising rapidly due to a "serious shortage of supply."

Trendforce, an industry analyst, recently raised its forecast for a month-on-month rise in DRAM prices in the second quarter from 13-18% to 18-23%. DRAM chips account for nearly 70% of SK Hynix's total sales.