MANHASSET, N.Y. South Korea semiconductor supplier Hynix Semiconductor saw its second-quarter net profit plunge 62 percent from a year ago due to a steep decline in memory-chip prices amid a supply glut, according to several online reports.
According to an Associated Press
report, Hynix earned 238.4 billion won ($231.4 million) in the three months ended June 30, down from 625.2 billion won ($606.6 million) a year earlier. Sales fell 27 percent to 1.23 trillion won ($1.2 billion) from 1.68 trillion won ($1.6 billion) a year earlier.
Despite the dismal results, Hynix met the guidance of Thomson Financial analysts, who expected the memory supplier to earn 168.9 billion won ($163.8 million) on sales of 1.19 trillion won ($1.15 billion).
Hynix’s steep profit decline comes as the company is supposedly stabilizing its long-shaky finances. Earlier this month, Hynix completed a four-year debt restructuring program
, returning control of the company to its management. Creditors now own 81 percent of Hynix.
For the second quarter, Hynix’s troubles could be blamed on eroding prices of dynamic random access memory, or DRAM, chips used in personal computers. According to reports, spot DRAM prices have fallen more than 40 percent since the beginning of the year, though began to stabilize in May.
Falling memory prices also wreaked havoc with earnings at rivals such as Infineon Technologies AG, who Tuesday said its third fiscal 2005 quarter loss was wider than expected
, due to memory prices that eroded 30 percent.
On the bright side, Hynix expects a stronger second half as memory prices continue to stabilize.
"We expect stable DRAM prices in the second half as producers shift capacity to flash memory chips," Hynix's senior vice president O.C. Kwon was quoted as telling analysts in a Reuters
Kwon’s projection is backed up by market research firms such as iSuppli Corp.
which said in a recent report that both Hynix and rival Samsung are aggressively shifting production from DRAM to more profitable NAND flash memory. The report expects suppliers to slow production increases and hold the line on contract price cuts the second half.