SK hynix expected to swing to 3dr quarter operating loss

SK hynix Inc., the world's No. 2 memory chip maker, is likely to see a third-quarter operating loss, a shift from its operating profit three months earlier, due mostly to a prolonged slump in the global PC market, analysts said Wednesday.

The chip maker posted 22.8 billion won ($20.5 million) in operating profit in the second quarter of this year, snapping its third consecutive operating loss since the third quarter of 2011.

The downbeat projections come amid a grim outlook for the global PC market. Worldwide PC sales are expected to gain 0.9 percent this year, slowing from last year's 1.7 percent growth and marking the second straight year of below 2 percent growth, according to the data by the International Data Corp.

"Although the third-quarter is usually a peak season, feeble PC demand has led to a 26-percent fall in PC DRAM prices in the respective quarter," said Dongbu Securities Co. analyst Kwon Seong-ryul.

Kwon predicted the total third-quarter operating loss of SK hynix to reach 55 billion won, with its DRAM business forecast to lose 60 billion won.

KDB Daewoo Securities Co. analyst James Song estimated in an Oct. 10 report that SK hynix is likely to undergo a 120 billion won operating loss in the July-September period.

"Considering factors such as a continued fall in PC DRAM prices as well as a decline in server DRAM prices, the loss is likely to widen more than expected," Song said.

The price for PC DRAMs is unlikely to see a "meaningful change" this year, according to Song, with the price for 4 gigabyte modules expected to fall to the $14-15 range from $16.25 in the second half of September.

The analyst said the price for server DRAMs, which account for a big chunk of SK hynix's earnings, also fell roughly 13 percent in the third quarter from three months earlier.

Analysts, however, predicted the company's earnings would rebound in the fourth quarter and gain further upward momentum next year.

"A slowdown in the PC DRAM price fall and a recovery in the NAND price are likely to lead SK hynix back to the black," said Meritz Securities Co. analyst Lee Se-chul.

Lee expected solid sales of Apple Inc.'s iPhone 5 and releases of other new Apple products, such as the iPad mini and MacBook Pro, to further boost NAND demand.

A delay in U.S. chipmaker Micron Technology Inc.'s purchase of Elpida Memory Inc. will also likely benefit the Korean chip giant by stalling technology development and spurring facility obsolescence, according to Lee's Oct. 10 report.

SK hynix is set to release its third-quarter earnings results on Oct. 24. (Yonhap)