SK Hynix sees supply chain issues improving in H2, more chip demand

SK Hynix sees supply chain issues improving in H2, more chip demand
SK Hynix sees supply chain issues improving in H2, more chip demand Copyright Thomson Reuters 2022
By Reuters
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By Joyce Lee and Heekyong Yang

SEOUL – South Korean chipmaker SK Hynix Inc said it expects supply chain issues to gradually improve from the second half of the year and demand for memory chips to grow, after booking a four-fold on-year increase in fourth-quarter operating profit.

The world’s second-biggest memory chipmaker joined other technology companies including bigger rival Samsung Electronics Co Ltd in flagging chip demand growth coupled with lingering supply chain snarls in 2022, as it forecast strong memory chip demand from data centres and other server clients.

“The long-term outlook for high-performance memory products, including server products … is highly positive,” SK Hynix said in an earnings briefing on Friday.

“Demand is rising due to factors such as the exploration of non-face-to-face infrastructure build-up, dissemination of AI (artificial intelligence) machine learning, and emergence of NFTs (non-fungible tokens) and metaverse as new applications.”

In NAND flash memory chips that serve the data storage market, SK Hynix last month completed the first phase of its acquisition of Intel Corp’s NAND business. With that acquisition, SK Hynix expects NAND flash sales to double this year from last, it said on Friday.

For DRAM chips that are widely used in data centres and tech devices, SK Hynix on Friday said it plans to manage inventory flexibly while focusing on profitability in 2022.

SK Hynix said 2022 capital expenditure will increase versus 2021’s 13.4 trillion won ($11.12 billion), mostly due to large construction and infrastructure investment such as the purchase of a future chip factory site in South Korea and a research-and-development centre in the United States.

In a regulatory filing on Friday, it said it would invest about 2.4 trillion won in Wuxi, China, where it has a chip factory, as part of ordinary investment for business operations, with supplementary investment in production facilities.

Shares in SK Hynix rose as much as 6.6% versus the wider market’s 1.4% after the chipmaker announced a 2022-2024 shareholder return policy that involved increasing fixed dividends by 20% and using about 50% of newly generated free cash flow for shareholder returns.

The chipmaker, whose clients include Apple Inc, reported 4.2 trillion won in October-December profit, its highest quarterly profit since 2018 and up from 959 billion won a year earlier.

Revenue climbed 55% to a record 12.4 trillion won.

($1 = 1,204.8900 won)

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