SK Hynix reports record quarterly operating loss, but expects rebound later this year

South Korean chipmaker SK Hynix has reported a report quarterly working lack of 3.4 trillion gained ($2.54 billion) for the primary quarter of the 12 months.

According to Reuters, that is its largest loss because the SK Group acquired Hynix in 2012.

This is a reversal from the two.84 trillion gained working revenue in the identical interval final 12 months, and a bigger loss from the the 1.89 trillion gained working loss the earlier quarter. Overall income tumbled 58% year-on-year to five.09 trillion, in accordance with the corporate’s earnings launch.

Net losses for the primary quarter got here in at 2.59 trillion gained, in comparison with a 1.99 trillion revenue within the first quarter of 2022.

The world’s second-largest reminiscence chipmaker mentioned working losses widened on account of “sluggish demand and falling product prices” because the reminiscence chip downturn continued by means of the primary quarter.

Still, the corporate is anticipating a rebound within the second half of the 12 months. Shares of SK Hynix have been larger by 1.75% in afternoon commerce after surging as a lot as 3.5% earlier Wednesday. The inventory is up 16% year-to-date.

“Inventory across the memory industry is expected to improve from the second quarter with production cut by suppliers taking into effect,” the earnings launch mentioned.

“The growing high-performance server market for artificial intelligence including ChatGPT and a wider adoption of high-capacity memory products by customers” can even give the market a lift, the corporate mentioned.

The outlook will doubtless enhance from the subsequent quarter, one analyst mentioned.

James Lim, senior analysis analyst at Dalton Investments, instructed “Squawk Box Asia” the chip trade has “passed the bottom” and is “slowly grinding toward a recovery.”

“We expect revenues to rebound in the second quarter after bottoming out in the first, driven by a gradual increase in sales volume,” SK Hynix additionally mentioned.

Rival Samsung Electronics is because of report first quarter earnings on Thursday. The chip big issued steering earlier this month saying working revenue for the primary quarter will doubtless are available in at 600 billion Korean gained ($449 million). If the steering is correct, it will be the corporate’s lowest revenue because the first quarter of 2009.

In early April, Samsung Electronics mentioned it will make a “meaningful” minimize to chip manufacturing, following related strikes by SK Hynix and Micron.

Lim mentioned the provision cuts by Samsung are “going to give [a] breather to SK Hynix and Micron.”

However, he says that if chipmakers make extra aggressive cuts, the trade may attain an “inflection point,” which he mentioned might not be removed from now.