South Korea's No. 2 chipmaker SK hynix Inc. said Thursday its net profit shot up 61.5 percent in the first quarter from a year earlier on robust sales of server and mobile dynamic random access memory (DRAM) products.
Net profit came to 1.29 trillion won ($1.2 billion) in the January-March period, compared with 802.5 billion won a year earlier, the company said in its regulatory filing.
Revenue gained 28.7 percent on-year to 4.81 trillion won in the first quarter, and operating profit also jumped 50.2 percent to 1.59 trillion won.
The operating profit hovered above the median estimate of 1.44 trillion won in a poll of 15 brokerages conducted by Yonhap Infomax, the financial news arm of Yonhap News Agency. The consensus sales estimate was 4.7 trillion won.
SK hynix said while first-quarter sales edged down 6.4 percent from the previous quarter due to falling seasonal demand, it managed to improve profitability through expanding its business portfolio and cutting production costs.
Although prices of PC DRAMs lost ground, DRAMs for servers and mobile devices performed relatively well, leading to a price decline of 4 percent on-quarter, it added.
"The shipment of NAND flash products stood still from a quarter earlier helped by the release of new mobile products," the company said, adding the average sales price of the segment moved down 7 percent.
For the second quarter, SK hynix painted a rosy outlook for the global DRAM market citing rising demand in the mobile sector.
It added the NAND lineup will also keep its growth helped by the mobile sector as well as solid state drive (SSD) products. An SSD is a data storage device made with a NAND flash memory chip that saves data without power present and is more durable and faster than a hard disk drive.
The South Korean chipmaker also said it will expand its portion of mid 20-nanometer class DRAM products.
The development of the advanced 20-nanometer technology, a finer microprocessing of memory chips, has been a major task for global chipmakers competing to get ahead as it lowers production costs.
Twenty-nanometer processing technology can get 30 percent more productivity from 300mm-wafers than the preceding 25-nanometer-based production, and 50 percent more than 29-nanometer technology.
It added the company will also focus on expanding its double data rate-4 (DDR4) lineup following the industry's move away from DDR 3 modules.
Meritz Securities Co. expects the chipmaker to keep its robust earnings down the road in 2015, adding SK hynix will post an operating profit of 1.6 trillion won and sales of 4.9 trillion won in the second quarter.
Analysts, however, also warned that the slowing demand of smartphones in China along with falling demands for personal computers and electronics from emerging markets may have an adverse impact on SK hynix.
The company added its cashable assets came to 4.24 trillion won as of end-March, up 193 billion won from a quarter earlier, while its debt came to 3.5 trillion won, down 603 billion won over the cited period, indicating its financial health has improved.
The first-quarter results were released before the opening of the stock market Thursday. Shares of SK hynix traded 2.43 percent higher at 46,350 won on the main bourse as of 9:25 a.m., while the KOSPI edged up 0.26 percent. (Yonhap)