SK Hynix Announces Steep Profit Drop, NAND Production Cut

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SK Hynix today announced earnings results for the first quarter of 2019, and they don’t look too good. The company saw a revenue and profit drop of 32% and 69%, respectively, compared to the previous quarter. There is some good news though, as the company also announced use of the 2nd generation 1Ynm 10nm process in the second half of 2019.

From all the doom and gloom news stories we’ve seen recently about DRAM and NAND chip suppliers, it shouldn’t come as a big surprise that SK Hynix’s revenues and profits dropped last quarter. What may surprise many is that the drop in both revenues and profits was so significant. The company lost almost a third (32%) of its revenue and more than two-thirds (69%) of its profits quarter-over-quarter. SK Hynix’ revenue dropped 22% year-over-year.

The company blamed the severe decline on "a faster-than-expected price decline and lower shipments due to slowing memory demand." The seasonal slowdown and “conservative server purchases” resulted in a 8% decline in bit shipments and 27% average selling price for SK Hynix.

1Ynm DRAM to Be Sold in Second Half of 2019

SK Hynix intends to migrate to the second generation 1Ynm process for DRAM production in the second half of 2019. The company will also expand the supply of the high-density 64GB module along with a new server chipset that supports the high-density RAM.

The company said that the new 1Ynm process allowed it to reduce the die size of an 8Gb DDR4 chip by 20% and its power consumption by 15% when compared to a similar chip using the previous-generation 1Xnm process.

SK Hynix will initially produce an 8Gb DDR-3200 chip on this process, featuring two important improvements, such as using a 4-Phase Clocking scheme, as well as the Sense Amplifier Control technology. The first technology increases signal strength to sustain stability at high data transfer rates, while the second reduces the probability of data error rates when shrinking the chips’ die sizes.

SK Hynix intends to build DDR5, LPDDR5 and GDDR6 memory chips on this process in the near future, so it’s important for the company to switch quickly to it, especially considering that Samsung and Micron have been using their 2nd generation 10nm process technologies for RAM production since last year.

Cutting NAND Production

SK Hynix didn’t fare much better with its NAND division. Bit shipments declined by 6% quarter-over-quarter. Meanwhile, the average selling price declined 32%, due to high inventory levels and high competition, SK Hynix said. The chipmaker intends to cut output of NAND flash by more than 10% by the end of the year.

The company has stopped producing the 36-layer and 48-layer 3D NAND, SK Hynix’s initial 3D NAND products that had a relatively high cost of production. The chipmaker will mostly build 72-layer 3D NAND chips this year and will also attempt to strengthen its position in the SSD market with 96-layer “4D NAND” products in the second half of the year.

Lucian Armasu
Lucian Armasu is a Contributing Writer for Tom's Hardware US. He covers software news and the issues surrounding privacy and security.
  • Tanyac
    Slowing demand? Faster than expected price drop? If prices dropped here I'd upgrade 10 PCs this year. But prices are NOT dropping here. Which is why demand is slowing.

    I'd be interested in seeing demand and price by region, specifically for Australia, from 2016 - Now. Can you get your hands on that data?