(Updated with conference call comments)

SK hynix Inc. is confident of matching the 2018 peak year as NAND demand is expected to back the second-half performance after DRAM fueled income and revenue to their best since the last super cycle of three years ago.

The world’s No. 2 memory chipmaker disclosed Tuesday that it posted an operating profit of 2.7 trillion won ($2.3 billion), up 103.5 percent on quarter and 38.3 percent on year. Revenue increased 21.5 percent on quarter and 19.9 percent on year to 10.3 trillion won. Net income was at 1.99 trillion won, up 100.3 percent on quarter and 56.5 percent on year.

Revenue was slightly higher than the market consensus of 9.87 trillion won while operating profit fell slightly short of estimated 2.7 trillion won.

Shares of SK hynix closed 0.85 percent lower at 116,000 won on Tuesday.

Earnings were buoyed by growing demand for PCs, graphics, and consumer-use memory chips and recovery in demand for server memory. Increased sale of advanced processing products like 10-nano second generation and third-generation DRAM and 128-layer NAND flash helped boost profitability.

Prices of memory chips have been on a surge this year.

According to DRAMeXchange, the fixed price of DDR4 8Gb 1Gx8 2133MHz DRAM jumped 26.67 percent on quarter in the second quarter ended June. The price of 128Gb 16Gx8 MLC NAND flash also gained for the first time in 13 months in the second quarter.

“DRAM demand was better than expected in the first half, rising 20 percent on year. NAND prices have also risen sharply from the second quarter,” said Noh Jong-won, senior vice president and head of corporate strategy in conference call.

Upbeat environment led SK hynix to log an operating profit of over 2 trillion won since the fourth quarter of 2018. It is also the first time for the three-month revenue to top 10 trillion won since the third quarter of 2018.

In the April-June period, SK hynix’s operating margin reached 26.11 percent, best since 44.58 percent in the fourth quarter of 2018 during chip super cycle. It is also higher than 22.62 percent in the same period a year ago and 15.59 percent in the previous quarter.

The winning streak is expected to stretch out into the second half with seasonable demand adding to the favorable market conditions and upgraded capacity.

In the second quarter, SK hynix plans to expand sales of 64 gigabit and higher server products in DRAM. Its new 10-nano fourth-generation DRAM based on extreme ultra violet technology will be churning out DDR5 in the second half of the year.

In NAND flash memory, SK hynix is hoping to shift back to profit in the third quarter by expanding sales of corporate-use SSDs and 128-layer based mobile solution. The company will start mass production from 176-layer memory later in the year.

“Consumer demand helped in the first half, and corporate demand can fuel our second half,” Noh said, projecting robust demand for high-performance DRAM and flash memory to continue into next year.

He projected DRAM shipments to maintain the 20-percent growth level of the first half throughout the year while its flash shipments exceed average market growth on increased yield and productivity.

He estimated the yield from 128 to 176 layers make up 80 percent of flash output this year.

SK hynix expects to complete its acquisition of NAND flash memory unit of Intel as it needs just Chinese clearance on antitrust issues.

By Lee Eun-joo

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