South Korean chipmaker’s third-quarter revenue tumbles 60 % amid a surge in inflation.
South Korean chipmaker SK Hynix says the reminiscence chip market is going through an “unprecedented deterioration”, as its third-quarter revenue tumbled 60 % amid a surge in inflation.
“Provide will proceed to exceed demand in the meanwhile,” the world’s second-biggest reminiscence chip maker mentioned in a press release on Wednesday, pointing to a fall in pocket book and smartphone shipments.
The corporate mentioned it plans to scale back its funding subsequent 12 months by greater than 50 % on-year.
The revenue fall comes as red-hot inflation has harm demand for digital gadgets and the reminiscence chips that go in them.
SK Hynix’s working revenue fell to 1.66 trillion received ($1.16bn) within the July-September quarter, from 4.2 trillion ($2.93bn) received a 12 months earlier. The outcome was under analysts’ expectations of a 1.87 trillion ($1.31bn) received revenue, based on Refinitiv SmartEstimate.
Costs of DRAM chips, utilized in gadgets and servers, fell by about 20 % within the third quarter from the second, SK Hynix mentioned. Costs of NAND Flash chips that serve the information storage market fell greater than 20 %.
The lacklustre outcomes echo larger rival Samsung Electronics’ third-quarter earnings droop and United States peer Micron Know-how Inc’s warnings of a pointy decline in PC and smartphone gross sales.
Chipmakers had loved a robust post-pandemic demand surge till early this 12 months, which created a scarcity of sure chips and disrupted the manufacturing of automobiles and varied digital gadgets.
However chip demand has turned sharply weaker in current months, as hovering inflation, rising rates of interest and a depressing financial outlook have led customers and companies to tighten their spending.
The worldwide smartphone market contracted 9 % on-year in July-September, marking the worst third quarter since 2014, based on evaluation supplier Canalys.
DRAM chip costs are anticipated to fall additional within the present quarter as reminiscence chip firms have misplaced their bargaining energy with prospects who've stockpiled chips and now wrestle to clear them because of weak demand, mentioned Wi Min-bok, an analyst at Daishin Securities.
With the reminiscence chip glut seen to final till the primary half of subsequent 12 months, SK Hynix joins chipmakers which have begun curbing provide and funding. Micron plans to chop investments by greater than 30 % subsequent 12 months. TSMC has additionally minimize its 2022 funding plan.
SK Hynix mentioned its 2022 funding is predicted to be within the “higher vary of 10-20 trillion received” ($7-14bn).
Regardless of the present drop in demand for server reminiscence chips, SK Hynix forecast extra urge for food in the long term as hyper-scale information centres proceed their funding to fulfill development in industries resembling synthetic intelligence (AI), large information and the metaverse.
Third-quarter income fell 7 % on-year to 10.98 trillion received ($7.6bn).
SK Hynix shares have been flat in early morning commerce, versus a 0.3 % rise within the wider market
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