SK hynix, the second-largest memory chipmaker in the world, announced on Thursday, a 289 percent on-quarter increase in its operating profit in the first quarter.
Despite concerns about a coronavirus downturn in the global economy, the South Korean chipmaker posted 7.19 trillion won ($6.4 billion) in sales and 830 billion own in operating profit during the January to March period. The company saw server demand due to the coronavirus-driven shift to working from home partly offset weak smartphone business.
The company's net profit stood at 649.1 billion won.
Compared to the final quarter of last year, the sales and operating profit jumped 4 percent and 239 percent, respectively.
However, the operating profit declined 41.4 percent on-year, despite a 6.3 percent increase in sales.
For DRAM, strong demand of server clients offset the weak mobile demand which declined due to both seasonal slowdown and the COVID-19 impact. As a result, the company’s DRAM bit shipments declined only by 4% QoQ and DRAM average selling price increased by 3% QoQ.
For NAND Flash, the favorable demand of server solid state drives (SSDs) led to 12% increase of bit shipments and 7% increase of average selling price QoQ respectively.
The company also warned that demand for chips will remain volatile, while restrictions on global movement, if prolonged, could disrupt production, sales and product development across the industry.
“There are a lot of uncertainties about the outlook for supply and prices for servers in the second half,” Cha Jin-seok, SK Hynix’s chief financial officer, told a conference call.
While the global smartphone market is expected to post a sharper decline this year than last year, the chipmaker said it is positive about demand for servers and PCs as more people are at home, boosting demand for online education, video streaming and e-commerce.
SK Hynix said shipments of DRAM chips, used in smartphones, PCs and servers, to remain flat in the current quarter from the previous quarter.
SK hynix said it would maintain its previously announced investment plan which is notably decreased year-over-year (YoY). The company will commit itself to technology migration and the preparation of M16 FAB’s clean room planned for the end of this year. It will also continue shifting some of its DRAM capacity to CMOS image sensors, and transferring its existing NAND Flash capacity to 3D NAND Flash as planned.
For DRAM, SK hynix will respond to the increasing demand for high-capacity server modules larger than 64 Gigabytes (GB), and expand 1Ynm mobile DRAM sales in order to improve profitability. At the same time, the company will begin mass production of 1Znm DRAM products in the second half of this year and timely react to both GDDR6 and HBM2E markets, which are expected to begin full-fledged growth.
For NAND Flash, the company will increase the sales portion of 96-layer NAND Flash and start mass production of 128-layer products in the second quarter of this year. Additionally, SK hynix will expand sales proportion of SSD products which already reached 40% among its NAND Flash sales in the first quarter, and diversify its portfolio with PCIe SSDs for data centers to improve profitability.