South Korean memory chip maker SK Hynix reported its first operating loss in a decade for the fourth quarter of 2022, due to weak demand and a sharp drop in memory chip prices.
The company said on Wednesday it posted revenue of 5.7 billion euros (7.7 trillion won) and an operating loss of 1.2 billion euros (1.7 trillion won) in the quarter. The net loss also amounted to 2.6 billion euros (3.5 trillion won). It was SK Hynix’s first quarterly operating loss since the third quarter of 2012.
After enjoying record demand before and during the pandemic, memory chipmakers are feeling the brunt of the global economic downturn and the war in Ukraine.
Slowdown from the second half of 2022
The chip business of Samsung, the world’s largest memory chipmaker, barely broke even in the fourth quarter, while US giant Micron also posted a loss in its last fiscal quarter. .
For the full year of 2022, SK Hynix posted revenue of 33.3 billion euros (44.6 trillion won) and operating profit of 5.23 billion euros (7 trillion won). While revenue was up 4% from 2021, operating profit plunged 44% year-on-year.
SK Hynix said its operating profit declined as the memory chip industry entered a downturn starting in the second half of 2022. Uncertainties remain, the company said, and it will continue to cut costs. investments and costs.
Like Samsung, SK Hynix expects memory chip market conditions to improve in the latter part of 2023. However, SK Hynix said Intel’s launch this year of a new server processor that adopts the DDR5 is expected to increase the demand for high-end memory chips.
Difficulty planning in the chip industry
This situation comes after years of strong growth for chipmakers. A growth that even led to a shortage of chips in 2021, but also an explosion in counterfeits.
Above all, the memory chip industry has a hard time predicting the future. This is a significant issue for chip makers because chips take at least six months to manufacture. Once it starts, it is no longer possible to stop it. Chip factories must then be run at nearly full capacity, in which case operating costs quickly become unsustainable.
The economics of the semiconductor industry require factories to continuously produce chips at near capacity. In other words: it is not possible to slow down a production chain because demand has dropped. We must continue at all costs. Even if it means ignoring regular income… at least, as long as quality forecasts cannot be provided by the players in the sector.
Source: “ZDNet.com”