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SK Hynix sees memory chip demand slowing in second half

PC, smartphone shipments expected to be 'lower than initially predicted'

SK Hynix's operating profit rose 56% to $3.2 billion in the April-June quarter, helped by robust demand from server clients and a strong dollar.   © Reuters

SEOUL (Reuters) -- South Korean chipmaker SK Hynix said it expects memory chip demand to slow in the second half of the year, after booking its biggest second-quarter profit since 2018.

"Shipments of PCs and smartphones that contain memory (chips) are expected to become lower than initially predicted," SK Hynix said in a statement.

"Demand for server memory supplied to data center customers is also likely to slow as customers will consume their inventories."

Rising inflation, concerns about a downturn in major markets, and repeated COVID-19 lockdowns in China have resulted in slowing smartphone sales. As well, a clutch of chipmakers including Micron Technology Inc MU.O has warned of a rising chip glut after a two-year-long global shortage of chips.

SK Hynix's prediction that server chip demand will also slow in the second half of the year is a blow to what had been the only remaining bright spot in memory chip demand, as large tech companies such as Amazon that use a lot of data center services met cloud demand.

SK Hynix's bigger rival Samsung Electronics earlier this month reported a strong preliminary second-quarter profit, likely on server chip demand.

The world's second-biggest memory chipmaker said on Wednesday its operating profit rose 56% to 4.2 trillion won ($3.2 billion) in the April-June quarter, versus 2.7 trillion won a year earlier, helped by robust demand from server clients and a strong dollar that offset higher material costs.

Revenue climbed 34% on-year to a record 13.8 trillion won.

Shipments of DRAM chips, used in devices and servers, rose around 10% in the second quarter from the first, SK Hynix said. Shipments of NAND Flash chips, that retain power in smartphones after the power is turned off, rose by a high single-digit percentage.

SK Hynix's chip sales are made mainly in dollars, which hit a 20-year high during the quarter, boosting the value of its profits reported in won.

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