SK Hynix Expects Soft Server Demand Following Third-Quarter Profit Surge
SK Hynix, the world’s No.2 memory chip maker, said it expected inventory build-up by Huawei’s competitors in China to boost mobile demand in the current quarter, but its mainstay server demand would remain week.
The market for server chips however would remain difficult until customers begin to stock up again later this quarter or early next year, it added.
The chipmaker reported third-quarter operating profit of KRW 1.3 trillion (roughly Rs. 8,524 crores), up from KRW 473 billion (roughly Rs. 47,300 crores) a year earlier as Huawei’s rush of orders before US restrictions offset weak server demand. The result was in line with analysts’ expectations.
SK Hynix agreed in October to buy Intel’s NAND memory chip business for $9 billion (roughly Rs. 66,000 crores) in an all-cash deal, aiming to more than triple its NAND revenue in the next five years, compared with 2019.
It aims to leverage the acquisition to scale up and expand in the fast-growing data centre market, CEO Lee Seok-hee told an earnings call.
SK Hynix has enough financial resources to fund the deal, although sales of its shares in Japan’s Kioxia Holdings Corp are also an option, CFO Cha Jin-seok said.
SK Hynix would use other means like cash, borrowing and asset securitisation to fund the purchase, while maintaining a cautious investment strategy for its DRAM business, executives said.
SK Hynix shares were up 1.1 percent compared to a 0.8 percent rise in the wider market.
© Thomson Reuters 2020
Are iPhone 12 mini, HomePod mini the Perfect Apple Devices for India? We discussed this on Orbital, our weekly technology podcast, which you can subscribe to via Apple Podcasts, Google Podcasts, or RSS, download the episode, or just hit the play button below.