SK hynix: Fiscal 1Q22 Financial Results

SK hynix Inc. reported revenues of 12.16 trillion won, operating profit of 2.86 trillion won (with OP margin of 24%) and net income of 1.98 trillion won (net income margin 16%) in 1FQ22.

The quarterly revenues of more than 12 trillion won in the low season of the January-March period top those of 1FQ18 when memory industry enjoyed one of the best times.

A smaller-than-expected fall in memory chip prices and revenues of Solidigm, which was incorporated as SK hynix’s subsidiary at the end of 2021, contributed to the earnings. The operating profit of 2.86 trillion won is also the best performance for the first quarter since 2018. The company reported 8.72 trillion won in revenues and 4.37 trillion won in operating profit in the first quarter of 2018

“Consumption of some IT products slowed down from the start of the year amid ongoing challenges including the supply chain issue,” the company said. “SK hynix responded to customer demand in a flexible way, while focusing on profitability management, resulting in handsome earnings.”

The firm expects the memory industry to continue to grow as the volatility of the industry is believed to be kept relatively low.

The latest financial results also reflect the one-off provision that the company decided to set aside in accounting following finding of a performance weakness in some DRAM products sold previously. Following an analysis of the reason and close consultation with the customer, SK hynix decided to start a compensation process including product exchange for the customer. The provision amount of 380 billion won is believed to be enough to cover costs of the compensation.

The impact of the provision is expected to be short-lived as it is a one-off item. Development of technology and production of next-gen products are also being implemented as scheduled without a delay.

“We’ve been improving the yield rate of 1anm DRAM products (the 4th gen of the 10nm node) and 176-layer 4D NAND, while increasing their production volume. We’re also on track to develop the next-gen products. I think we’ve accomplished meaningful performance despite the seasonality issue. As demand for server chips is on the rise, the memory business will improve into the second half,” Kevin (Jongwon) Noh, CMO, said. “We will strive to meet customer demand by continuing to improve the yield rate despite a difficulty in supply of the equipment.“

SK hynix also announced that it has revised the company regulations on the committee responsible for nomination of non-executive director candidates with an aim to strengthen independence and diversity of the board.

“We’re stipulating a strengthened procedure to verify outside director candidates and stepped up efforts to increase the number of candidates and appointments of female outside directors,” the company said.