Feature
- In Q2, sales of both DRAM and NAND products rose.
- The operating margin improved from -39% in Q2 2023 to -67% in Q1 2023.
- DRAM’s average selling price (ASP) increased, significantly boosting income.
SK Hynix Inc., a well-known manufacturer of memory semiconductors, released the financial results for Q2 2023. Money earned: 7.306 trillion won Operational loss of 2.882 trillion won (operating margin of -39%) (Net margin: -41%) Net loss: 2.988 trillion won.
AI Market Expansion Boosts Demand
- The market for generative AI, which is mainly focused on ChatGPT, has seen substantial growth.
- As a result, demand for AI server RAM shot up quickly.
- Sales of high-end goods like HBM3 and DDR5 were robust, which led to a 44% sequential gain in Q2’s revenue and a 15% decrease in operating loss.
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DRAM and NAND Sales Surge
- In Q2, sales of both DRAM and NAND products rose.
- DRAM’s average selling price (ASP) increased, significantly boosting income.
- Due to increasing sales of premium goods for AI servers, DRAM blended ASP climbed despite a fall in regular DRAM product pricing like DDR4 due to weak PC and smartphone demand.
Efforts to Reduce Operating Loss
- SK Hynix’s operating loss was decreased because of continuous cost-cutting measures and reduced inventory value loss.
Operating Margin Improvement
- The operating margin improved from -39% in Q2 2023 to -67% in Q1 2023.
Future Outlook and Strategy
- Future demand for AI memory is anticipated to remain strong, according to SK Hynix.
- To increase profits, the business wants to increase sales of high-end DRAM goods, including HBM3, DDR5, LPDDR5, and 176-layer SSD devices.
Investment Plans
- This year, SK Hynix hopes to improve the quality and yields of DRAM, 238-layer NAND, and 1b-nanometer, the fifth iteration of the 10nm process technology.
- When it becomes apparent that the industry is recovering, the corporation will increase mass manufacturing.
- The business will reduce NAND manufacture to deal with the existing inventory levels.
- In terms of consolidated investment, SK Hynix continues to advocate for a reduction of at least 50% from 2022 to 2023.
- To support future market expansion, the business will spend money extending the high-density DDR5 and HBM3 capacity.
Management’s Perspective
- According to Kim Woohyun, Vice President and CFO at SK Hynix, the memory chip market has passed its low point and begun to recover.
- The corporation will use its technological competitiveness in high-end items to increase profits.
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Conclusion
In Q2 2023, SK Hynix struggled with operational and net losses but had considerable revenue growth thanks to rising demand for AI memory and high-end product sales. The company’s strategic initiatives for enhancing core technologies and lowering operational expenses show its dedication to long-term expansion and market dominance.
