SEOUL (AFP) – The world’s second-largest memory chip maker, South Korea’s SK Hynix, posted a 95 per cent quarterly profit plunge yesterday as it suffers from a long-running lull in the global market.
The East Asian country’s chip manufacturers – led by behemoth Samsung Electronics – have enjoyed record profits in recent years as prices for their products soared.
SK Hynix supplies chips to companies from United States (US) giant Apple to China’s Huawei but demand began to decline and supply increase after manufacturers invested billions in new factories.
Operating profit for SK Hynix dropped 95 per cent to KRW236 billion (USD198 million) year on year in the period of October to December, the company said in a statement.
The firm also recorded a net loss of KRW118 billion, while sales fell 30 per cent to KRW6.9 trillion.
For the full year 2019, net profit was KRW2.01 trillion, down 87 per cent on the previous year.
The manufacturer has been strained by a trade war between China and the US and caught in a diplomatic row between Seoul and Tokyo over wartime history, with Japan last July imposing tough restrictions on exports crucial to South Korean tech giants.
“The increase in inventory burden and conservative purchasing policies on the side of customers led to a slowdown in demand as well as price falls,” the chip maker said.
The company will “carry out more prudent production and investment strategies, as complexities and uncertainties still remain much higher than in the past,” it added.