SK hynix reported its best-ever quarterly operating profit in two successive quarters, amid favorable conditions in DRAM and NAND flash markets, the chipmaker announced Tuesday.

The firm said it posted 6.6 trillion won ($5.9 billion) in sales and 3.05 trillion won in operating profit, rising by 69 percent and 573 percent, respectively, in the April-June period on-year.

The ratio of operating gains to revenue was 46 percent, also setting a new record in surpassing the 40 percent posted in 2004.

The local chipmaker attributed its record-breaking earnings to favorable conditions in the chip market and price increases for DRAM and NAND flash memory. 


Its shipments and the average selling price of DRAM chips rose 3 percent and 11 percent, respectively, from the previous quarter on strong demand from the server sector.

As for NAND flash, although its shipments dropped by 6 percent due to sluggish growth in the demand for smartphones, the average selling price rose by 8 percent due to strong chip prices in every NAND flash product category.

Experts say rising demand and a supply shortage for memory chips will allow SK hynix to continue enjoying strong earnings in the second half of this year.

“Due to the continued price rises in DRAM and the increased shipments of 3-D NAND flash, the company is expected to post 3.8 trillion won in operating profit in the third quarter and 4 trillion won in the fourth quarter,” said Park Yoo-ahk, an analyst from Kiwoom Securities.

SK hynix spent more than 5 trillion won on capital expenditure in the first half, with a large part of the investment going into 3-D NAND flash. The chips, which have higher performance, face a supply shortage due to the growing storage capacity needs of mobile devices and rising demand for solid-state drives from server firms.

SK hynix plans to expand the production of DRAM and NAND flash this year.

“As for DRAM chips, we cannot fulfill the market’s demand just by changing production methods,” an official from the company said in a conference call Tuesday. “By the end of this year, we plan to expand production facilities for DRAM and NAND products.”

In line with these efforts, the chipmaker is considering completing construction projects in China and Cheongju, North Chungcheong Province, by 2018, instead of the originally planned 2019.

Shares of SK hynix traded at 71,500 won on the main bourse as of 12:11 p.m., down 2.05 percent from the previous session. The second-quarter report was released before the market opened Tuesday.

By Shin Ji-hye and news reports(shinjh@heraldcorp.com)