The company that helped drive up global DRAM prices following a fab fire during late 2013 posted a record operating profit this week following a recovery quick enough to take advantage of the hot DRAM market.
A September fire put half the SK Hynix fabrication plant in Wuxi, China, out of commission. This tightened the global supply of DRAM chips, drove prices up sharply, and generated profits for SK Hynix competitors, according to analysts.
The Wuxi plant was responsible for 15% of the DRAM chips manufactured worldwide at the time of the fire. The loss of those chips helped raise the price of the most popular configurations more than 40%, according to Gartner.
Global semiconductor revenue grew 5% last year, despite falling PC sales, according to IHS Technology. This was partly due to the average 32.5% rise in DRAM prices and the 24% growth in RAM sales.
Worldwide fourth-quarter DRAM shipments dropped 13% from the third quarter, according to Reuters. SK Hynix reported an 18% drop in revenue.
However, DRAM sales bounced back during the first quarter of 2014. The Wuxi plant came back online in February. For the first quarter, the company reported a 20% increase in DRAM unit sales, which offset an 8% drop in NAND chip sales. Such sales dropped globally due to sagging smartphone sales, according to a Korea Times analysis of the company's numbers.
SK Hynix posted an operating profit of just over 1 trillion won ($961.95 million) for the first quarter, solidly beating the 971 billion-won target set by analysts. Its net profit was 802.2 billion won ($771.7 million), according to the Korea Herald.
SK Hynix expects the DRAM market to continue to grow at least through the second quarter, and it expects NAND chip shipments to rise 45% from the fourth quarter of 2013. The company gets about 80% of its revenue from DRAM and 17% from NAND. It currently holds 26% of the global DRAM market.
— Kevin Fogarty is a freelance writer for EE Times