SK hynix Reports First-Quarter 2022 Financial Results

Rhea-AI Summary

SK hynix reported strong financial results for Q1 2022, with revenues reaching 12.16 trillion won and operating profit at 2.86 trillion won, achieving an operating margin of 24%. Net income was 1.98 trillion won, reflecting a 40% decline year-over-year. The company attributes its performance to a smaller-than-expected decline in memory chip prices and contributions from its subsidiary Solidigm. However, it also set aside a 380 billion won provision for compensation due to weaknesses in some DRAM products. Despite challenges, SK hynix remains optimistic about growth in the memory industry.

Positive

• Q1 2022 revenues of 12.16 trillion won, highest since 2018.
• Operating profit of 2.86 trillion won, with a 24% operating margin.
• Smaller-than-expected decline in memory chip prices.
• Continued development of next-generation products without delays.

Negative

• Net income decreased by 40% year-over-year.
• Provision of 380 billion won set aside for compensation due to performance weaknesses in DRAM products.

SEOUL, South Korea, April 26, 2022 /PRNewswire/ -- SK hynix Inc. (or "the company", www.skhynix.com) reported today revenues of 12.16 trillion won, operating profit of 2.86 trillion won (with OP margin of 24%) and net income of 1.98 trillion won (net income margin 16%) in the first quarter of 2022.

The quarterly revenues of more than 12 trillion won in the low season of the January-March period top those of the first quarter of 2018 when memory industry enjoyed one of the best times. A smaller-than-expected fall in memory chip prices and revenues of Solidigm, which was incorporated as SK hynix's subsidiary at the end of 2021, contributed to the earnings. The operating profit of 2.86 trillion won is also the best performance for the first quarter since 2018*.

*SK hynix reported 8.72 trillion won in revenues and 4.37 trillion won in operating profit in the first quarter of 2018

"Consumption of some IT products slowed down from the start of the year amid ongoing challenges including the supply chain issue," the company said. "SK hynix responded to customer demand in a flexible way, while focusing on profitability management, resulting in handsome earnings."

The company expects the memory industry to continue to grow as the volatility of the industry is believed to be kept relatively low.

The latest financial results also reflect the one-off provision that the company decided to set aside in accounting following finding of a performance weakness in some DRAM products sold previously. Following a thorough analysis of the reason and close consultation with the customer, SK hynix decided to start a compensation process including product exchange for the customer. The provision amount of 380 billion won is believed to be enough to cover costs of the compensation.

The impact of the provision is expected to be short-lived as it is a one-off item. Development of technology and production of next-generation products are also being implemented as scheduled without a delay. "We've been improving the yield rate of 1anm DRAM products (the fourth generation of the 10nm node) and 176-layer 4D NAND, while increasing their production volume. We're also on track to develop the next-generation products."

"I think we've accomplished meaningful performance despite the seasonality issue. As demand for server chips is on the rise, the memory business will improve into the second half," Kevin (Jongwon) Noh, chief marketing officer at SK hynix, said. "We will strive to meet customer demand by continuing to improve the yield rate despite a difficulty in supply of the equipment."

SK hynix also announced that it has revised the company regulations on the committee responsible for nomination of non-executive director candidates with an aim to strengthen independence and diversity of the board. "We're stipulating a strengthened procedure to verify outside director candidates and stepped up efforts to increase the number of candidates and appointments of female outside directors."

• 1Q22 Financial Results (K-IFRS)

Unit: Billion KRW
	1Q22	QoQ		YoY
		4Q21	% Change	1Q21	% Change
Revenues	12,155.7	12,376.6	-2%	8,494.2	43%
Operating Profit	2,859.6	4,219.5	-32%	1,324.4	116%
OP Margin	24%	34%	-10%P	16%	8%P
Net Income	1,982.9	3,319.9	-40%	992.6	100%

 

About SK hynix Inc.

SK hynix Inc., headquartered in Korea, is the world's top tier semiconductor supplier offering Dynamic Random Access Memory chips ("DRAM"), flash memory chips ("NAND flash") and CMOS Image Sensors ("CIS") for a wide range of distinguished customers globally. The Company's shares are traded on the Korea Exchange, and the Global Depository shares are listed on the Luxemburg Stock Exchange. Further information about SK hynix is available at www.skhynix.com, news.skhynix.com.

View original content:https://www.prnewswire.com/news-releases/sk-hynix-reports-first-quarter-2022-financial-results-301533747.html

SOURCE SK hynix Inc.

FAQ

What were SK hynix's Q1 2022 financial results?

SK hynix reported Q1 2022 revenues of 12.16 trillion won, operating profit of 2.86 trillion won, and net income of 1.98 trillion won.

How much did SK hynix's net income decline in Q1 2022?

SK hynix's net income declined by 40% year-over-year in Q1 2022.

What provision did SK hynix set aside in Q1 2022?

SK hynix set aside a provision of 380 billion won for compensation due to weaknesses in some DRAM products.

Is SK hynix optimistic about the memory industry?

Yes, SK hynix believes the memory industry will continue to grow despite current challenges.