[Click eStock] "SK Hynix, Difficult to Return to Profit Within This Year"

Q1 Memory Semiconductor Price Decline Larger Than Expected

[Asia Economy Reporter Hwang Yoon-joo] Hyundai Motor Securities forecasted on the 2nd that SK Hynix is unlikely to return to profitability within this year. The investment opinion 'Buy' and the target price of 105,000 KRW were maintained.

No Geun-chang, a researcher at Hyundai Motor Securities, stated, "The annual operating loss forecast has been revised from the previous 3.1 trillion KRW to 7.25 trillion KRW."

Researcher No predicted that the sales revenue for the first quarter of this year will decrease by 32.7% compared to the previous quarter to 5.2 trillion KRW, with an operating loss of 2.4 trillion KRW. This is due to a steeper-than-expected decline in memory prices in the first quarter.

He explained, "Since it is the seasonally slow first quarter, low-priced sales by companies like Micron, which have relatively large in-house inventories, are expected, so the decline in memory semiconductor prices in the first quarter will significantly exceed previous estimates."

According to TrendForce, the fixed price of 'Server DDR4 RDIMM' in January fell by 10% compared to the previous month. Researcher No analyzed, "The price in the first quarter of this year is expected to fall by more than 20% compared to the previous quarter," adding, "The fixed price of mobile DRAM, which has relatively smaller inventory, also fell by about 25% compared to the previous quarter, exceeding market expectations."

Researcher No forecasted, "Due to production cuts by memory suppliers and inventory reductions by customers, the market conditions in the second half of this year are expected to improve compared to the first half, and a rebound in fixed prices is also possible this year. However, given the rapid price decline, returning to profitability within this year will be difficult."

Meanwhile, SK Hynix recorded 1.55 trillion KRW in impairment losses on intangible assets related to NAND, including Solidigm, as non-operating expenses in the fourth quarter. Researcher No pointed out that Solidigm still faces significant performance uncertainties, with possibilities such as the construction of a second plant in Dalian, China, this year.