SEOUL, Jan 31 (Reuters) - South Korea’s Hynix Semiconductor Inc. <000660.KS> on Wednesday posted a 35 percent rise in quarterly profit, soundly beating estimates, as strong sales of computer memory chips offset steep price drops for NAND chips.
The company’s outlook appears tough for the first quarter as prices of dynamic random access memory (DRAM) chips are expected to drop in the double digits while demand appears uncertain, analysts say.
Hynix, the world’s second-biggest memory chip maker, reported 1.02 trillion won ($1.08 billion) net profit in the quarter to December 31, well above a 678 billion won consensus forecast of 17 analysts polled by Reuters Estimates.
The figure compared with 384 billion won in the third quarter and 751 billion won a year earlier, when Hynix booked $463 million in tax-related gains.
For 2007, Hynix is expected to post a net profit of 2.05 trillion won according to Reuters Estimates, from 2.01 trillion in 2006.
Sales were 2.66 trillion won, against expectations of 2.28 trillion won and last year’s 1.74 trillion. Operating profit came in at 881 billion won, more than the 632 billion expected.
Hynix, which competes with bigger rival Samsung Electronics Co. Ltd. <005930.KS> in the memory chip market, has seen prices of its NAND-type memory chips tumble due to cooling demand for digital gadgets in the absence of a hit product.
Hynix said its average DRAM chip price rose 9 percent in the fourth quarter after rising by 9 percent in the third. DRAM shipments rose 31 percent in the fourth quarter.
Prices of NAND flash memory chips declined by about 11 percent in the fourth quarter after dropping by 24 percent in the third.
Hynix said during a conference call that it expected a weak NAND flash market in the first half of 2007 due to lack of a major demand driver, although demand is set to recover in the second half helped by new applications using the chips.
Shares in Hynix, with a market capitalisation of around $15.5 billion, fell 2.3 percent in the fourth quarter, trailing the broader market’s 4.6 percent rise.