The world’s second-largest memory chipmaker expects the memory chip sector to be bottoming out after several quarters of pain and might be moving toward recovery amid the proliferation of artificial intelligence systems.
South Korean chipmaker SK Hynix reported Wednesday a record quarterly operating loss of 3.4 trillion won in the first quarter. This is the most significant loss since Hynix was acquired by SK Group in 2012.
This is a reversal from the 2.84 trillion won operating profit in the first quarter of 2022 and an increasing operating loss versus the previous quarter. Revenue also slumped 58% versus the same quarter last year to 5.09 trillion. Net losses for the first quarter were about 2.59 trillion won, compared to a 1.99 trillion won profit in the first quarter of 2022.
“As the memory chip downturn continued through the first quarter, the company posted a sequential drop in revenues and widened operating loss on sluggish demand and falling products prices,” SK Hynix wrote in a statement. The company continued, “But we expect revenues to rebound in the second quarter after bottoming out in the first, driven by a gradual increase in sales volume.”
Chief Financial Officer Kim Woohyun sees the light at the end of the tunnel:
“The memory market, which is still under tough conditions, seems to be bottoming out.”
The call for a bottom in the memory sector downturn comes after Samsung Electronics Co., the world’s largest producer of chips, said earlier this month it would make a “meaningful” cut to memory production.
SK Hynix expects the memory chip glut to “improve from the second quarter with production cut by suppliers taking into effect.”
The company expects memory demand to increase in the second half of this year due to the “growing high-performance server market for artificial intelligence including ChatGPT and a wider adoption of high-capacity memory products by customers to have positive impact on the market.”
Recall PC demand surged during the Covid crisis, but shortly after, a bust cycle led to a glut of memory chips and all things computers. We’ve told readers since last fall it might be a good time to build a new trading computer as PC components plunged (read: here & here & here). Now a bottom in some of these components is forming.
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