(Bloomberg) — South Korean chipmaker SK Hynix Inc. posted a 56% rise in second-quarter profit thanks to resilient demand and a weak Korean won, but it predicted memory demand would slow in the second half of the year.
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Operating income rose to 4.2 trillion won ($3.2 billion) in the three months ended in June, the Apple Inc. supplier said on Wednesday, narrowly beating analyst estimates of a 4.1 trillion won profit. Sales increased 34% from a year ago to 13.8 trillion won, missing the estimated 14.3 trillion won.
The solid performance at the world’s second-largest memory chipmaker allays the worst concerns about slumping demand and oversupply. But the company was cautious in its outlook for the second half of the year, saying that PC and smartphone shipments are likely to be lower than initially predicted, and that server demand is also likely to slow.
The company will “carefully” review its 2023 investment plan, it said in a statement.
Prognoses for a global recession are now mainstream, and tech giants from Apple to Microsoft Corp. are pushing back spending and hiring plans for the next year. Hynix is also considering slashing its 2023 capital expenditure by about 25%, joining rival Micron Technology Inc. in cutting investment on fab expansions.
The market faces a potential glut of NAND as appetite for gadgets wanes. NAND flash prices are projected to fall by as much as 13% in the current quarter, and that may continue throughout the year, according to TrendForce.
“Due to slow destocking among distributors and a conservative stocking approach among clients, inventory problems have bubbled over upstream onto the supply side and sellers are under increased pressure to sell,” the Taiwan-based market research firm said in a note.
The extent of any future price declines hinges on Samsung Electronics Co. and Hynix, which together control more than half of memory chip supply. Falling in step with rival US firm Micron, the Korean duo pledged to protect profitability and manage chip supply to keep prices stable.
SK Group Chairman Chey Tae-won promised to invest $15 billion to build an advanced packaging and testing facility and further bolster research programs in the US, in his call with President Joe Biden on Tuesday.
Morgan Stanley downgraded Hynix to equal-weight and reduced its target price on Samsung on Monday, noting that chip producers were “suddenly” offering sharp price cuts for DRAM in the current quarter.
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