Hynix Posts 1st Quarterly Profits in 2 Years

Hynix Semiconductor, the world’s No. 2 memory chip-maker, said yesterday that it earned its first quarterly profit in two years in this year’s third quarter.

The company reported an operating profit of 209 billion won (176.8 million U.S. dollars) in the third quarter against sales of 2.12 trillion won. It had suffered an operating loss of 211 billion won in the second quarter.

Hynix also raked in net profits of 246 billion won in the third quarter, up from a loss of 58 billion won in the second.

The company attributed its strong showing to increased sales due to a slow recovery of the global economy.

○ Justifiable profits

According to DRAMeXchange, a global market research agency, the contract price of the DRAM chip, the DDR2 1-gigabit 667 megahertz product, was 2.06 dollars late this month, up 15.7 percent from early October.

The contract price, which refers to the average of prices at which manufacturers sell their products to main buyers in large amounts, exceeded two dollars for the first time in 14 months. The price had plunged to 0.81 cents at the peak of the global financial crisis early this year.

In addition, the average price of another major memory chip, the NAND flash memory, also rose around four percent over the same period, increasing Hynix’s shipments five percent.

Another major factor was the improved efficiency in the company’s production lines that made them more competitive than its overseas rivals, which suffered losses or barely earned profits.

Hynix now has only Samsung Electronics to catch up with.

○ Brighter future

Hynix is expected to fare well, as the end-of-the-year shopping season is nearing and the global personal computer market is showing rapid recovery partially thanks to the release of Microsoft’s Windows 7 operating system.

According to another market research agency IDC, the global PC market is expected to grow more than nine percent next year after shrinking one percent this year.

Hynix has improved its production process more rapidly than its foreign rivals to rank second only to Samsung in technological advantages.

Hynix will also raise production of next-generation DRAM chips called DDR3 from 30 percent of output in the third quarter to 45 percent by year’s end.

sanhkim@donga.com