SK Hynix increased Q3 operating profit by 175 percent from 2019

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South Korea Earns SK Hynix

SK Hynix recently reported a 175 percent annual increase in its third-quarter operating profit. The firm’s significant income boost came about due to spiking demand for its mobile dynamic random access memory (DRAM) products.

The chipmaker also detailed its plans to alter its business after concluding its acquisition of Intel’s memory business and how it will address the issue of climate change by facilitating industry-wide change.

SK Hynix’s Q3 Success

In the September ending quarter, SK Hynix made ₩1.3 trillion ($1.15 billion) in operating profit, up from the ₩473 billion ($424 million) it earned in the same period last year. In doing so, the company beat Wall Street’s consensus estimate of ₩1.27 trillion ($1.14 billion). It also brought its revenue intake up to ₩8.129 trillion ($7.298 billion), a 19 percent year-over-year improvement.

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SK Hynix attributed its business growth to its clients snapping up its mobile memory products in a press release. As the firm is a supplier for both Apple and Huawei, its recent results are not surprising. The American electronics giant just launched a new series of iPhones, and the Chinese telecom had been stockpiling electronic components.

The chipmaker also saw increased demand for DRAM from its consumer electronics customers and a surge in interest for its NAND modules from video game console makers.

Despite experiencing growth in those segments, SK Hynix reported declines in several other sectors. Demand for its server DRAM and solid-state drives (SSD) dropped significantly from the period prior. It recorded 7 and 10 percent quarter-over-quarter drops in its DRAM and NAND pricing. Those negative changes in its business prompted a 33 percent plunge in operating profit from Q2.

Changes for Q4 and Beyond

The chipmaker has a strategy to deal with its recent challenges, and more ambitiously, to change the server industry for the better.

In Q4, it intends to grow its mobile business segment by pushing its 1Ynm LPDDR5 DRAM offerings. The corporation also intends to highlight the quality of its high-capacity and high-bandwidth server products to bolster its market share. Similarly, it wants to drive sales of its 128-layer NAND to shore up its profitability.

SK Hynix detailed the strategy changes it wants to make after completing its acquisition of Intel’s memory assets. The firm will use its portfolio additions to balance its future output between NAND and DRAM products.

It also plans on establishing a leading position within the SSD field, which dovetails with a larger corporate initiative.

CEO Seok-Hee Lee noted his company believes climate change is a threat to the human race and will endeavor to mitigate its impact. For a start, the manufacturer intends to derive all of its power from renewable energy sources by 2050.

Going forward, SK Hynix will strive to accelerate the data center industry’s transition from hard disk drives (HDDs) to SSDs. Lee said SSDs consume less energy than their older counterparts, and if the entire sector upgrades its hardware, its carbon dioxide emissions would substantially decrease.

On the one hand, the chipmaker’s environment-focused roadmap is laudable for its holistic benefits. On the other, its new perspective will likely resonate with ecology-conscious hyperscale data center providers like Google. By making its values a more prominent part of its brand identity, the memory manufacturer could secure some major contracts.

Given the broader societal interest in conservation, SK Hynix’s new strategic focus could become a key market advantage.

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