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SK Hynix posts first profit fall in 2 yrs as macro woes hit chip demand
REUTERS 6:34 PM ET 1/23/2019

Symbol Last Price Change

SSNLF	44.2	0 (0%)
AAPL	153.92	+0.62 (+0.4%)
QUOTES AS OF 12:03:45 PM ET 01/19/2018

* SK Hynix logs first profit decline in 2 yrs

* Q4 profit falls short of market expectations

* Chip demand worsens on macro economic woes

* Profit drop stems from weak China smartphone demand - analysts (Adds analyst comment, SK Hynix's chip shipment and prices,)

By Heekyong Yang and Ju-min Park

SEOUL, Jan 24 (Reuters) - South Korean chipmaker SK Hynix Inc on Thursday reported a 1 percent fall in fourth-quarter operating profit from a year earlier, its first profit decline in two years as growing macroeconomic uncertainties weighed on chip demand.

The result was well below market expectations and analysts blamed U.S.-China trade friction for exacerbating the already slowing economy in China, putting a dent in demand for tech gadgets including smartphones.

"Sharp declines in Chinese demand for electronic products are materializing and Hynix's results are showing that," said Song Myung-sup, a senior analyst at HI Investment & Securities, adding that macroeconomic uncertainties would persist for "some time".

SK Hynix is the world's second-biggest memory chip maker behind Samsung Electronics(SSNLF) and a memory chip supplier for Apple Inc.(AAPL) It said its October-December profit was 4.4 trillion won ($3.9 billion), below a 5.1 trillion won average forecast drawn from 26 analysts, according to Refinitiv data.

"Growing macroeconomic uncertainties led to conservative purchasing behaviour by server customers and slowdown in smartphone sales," the company said in its presentation slides for the results. It did not elaborate on the uncertainties.

Rival Samsung earlier this month surprised the market with an estimated 29 percent drop in quarterly profit, blaming weak chip demand in a rare commentary issued to investors.

Prices for server DRAM chips, which help devices perform multiple tasks, are expected to fall by more than 20 percent in the first quarter as data centres in North America hold high levels of memory inventory, according to industry tracker DRAMeXchange.

Uncertainties from U.S.-China trade friction would put a drag on memory chip sales, DRAMeXchange said on Monday.

SK Hynix said its DRAM chip shipments fell by 2 percent in the fourth quarter, while its selling prices slid 11 percent from a quarter ago.

For NAND flash chips, which provide long-term data storage, shipments rose by 10 percent but the average selling price fell by 21 percent, the company said.