Apple memory chip supplier SK Hynix posts record US$1.4 billion loss amid chip market slump
- The world’s No 2 DRAM maker is cutting output and capex, as it awaits a recovery in the second half of the year
- Crosstown South Korean rival Samsung said it will not cut capex, a move that further weighs on memory prices
South Korean chip maker SK Hynix reported its biggest quarterly loss on record, owing to plunging prices in memory chips, and stuck to plans to halve capital spending this year.
Slammed by prices of memory that have fallen by more than 50 per cent since their 2022 peak, Hynix is cutting output and capex as it awaits a recovery in the second half of the year. Bit growth of Hynix’s DRAM and NAND chips will decelerate this quarter, it said. Sector-wide inventory levels will continue to grow, but should peak in the six months to June, the company said.
“With uncertainties still lingering, we will continue to reduce investments and costs, while trying to minimize the impact of the downturn by prioritising markets with high growth potential,” the company said in a statement on Wednesday, adding that it will focus on raising equipment efficiency.
“Hynix’s soaring inventory caused a decline in its memory prices that exceeded market expectations,” said Nam Dae-jong, analyst at eBest. Its inventory will remain high for the rest of the year, Nam said, adding the company needed to actively adjust capacity.
Unlike Hynix and Micron Technology, which have slashed spending, memory chip leader Samsung continues to invest in new capacity, as it eyes medium- to long-term demand. Samsung’s capex plans triggered a sell-off of the two South Korean chip makers’ shares, as investors had expected the world’s biggest memory chip vendor to slash capex and tighten memory supply.
The market will improve gradually, helped by China’s reopening and a recovery for mobile gadgets in the bottom half of the year, Hynix said. But for the full year, wafer output for both DRAM and NAND will likely fall from the previous year, it said.
Hynix, the world’s No 2 DRAM maker, has devoted years to turning around its NAND business. It sought to solidify its market share and improve profitability through the acquisition of Solidigm’s technology and factories, which includes facilities in China. The unit has since faced multiple challenges, including slumping demand and tighter US sanctions against tech exports to China.