By Joyce Lee and Heekyong Yang
SEOUL (Reuters) -South Korean chipmaker SK Hynix Inc said the industry downturn will worsen in the first half of 2023, as it turned in a record quarterly operating loss on Wednesday.
SK Hynix, however, said market conditions would gradually improve later in the year as chipmakers reduce supply in response to a deepening downturn in global tech demand and clients buy chips again at low prices.
“Industry experts do not expect an increase in supply of memory chips as market players are planning to reduce investments and production, which will lead inventories to peak within the first half,” the world’s No.2 memory chipmaker, after Samsung Electronics, said in a statement.
For the quarter ended December, SK Hynix swung to a 1.7 trillion won ($1.38 billion) operating loss, from 4.2 trillion won profit a year earlier. The quarterly loss is the biggest since SK Group acquired Hynix in 2012.
This compares with expectations for a 1.3 trillion won operating loss, according to estimates from 21 analysts compiled by Refinitiv SmartEstimate and weighted toward analysts that are more consistently accurate.
Revenue fell 38% year-on-year to 7.7 trillion won.
The slump in demand for tech devices amid red-hot inflation and rising interest rates drove chipmakers’ efforts to offload inventory at modest prices during the fourth quarter, analysts said. This hit earnings and led to depreciation in asset value of SK Hynix’s NAND Flash chip inventory, they added.
On Tuesday, Samsung Electronics reported a 69% plunge in its operating profit, although it retained a profit for its chip business during the fourth quarter.
SK Hynix said in October it plans to reduce its 2023 investment by more than 50% versus 2022, after warning of an “unprecedented deterioration” in memory chip demand.
($1 = 1,232.4700 won)
(Reporting by Joyce Lee and Heekyong Yang; Editing by Lincoln Feast and Himani Sarkar)