Jan. 27 (Bloomberg) -- Hynix Semiconductor Inc., the world’s second-largest maker of computer memory chips, reported fourth-quarter profit that fell more than analysts estimated after prices for the components declined and the company lost a legal case.
Net income was 110.1 billion won ($99 million) from 656.8 billion won a year earlier, Ichon, South Korea-based Hynix said today in a regulatory filing. That compares with the 229 billion won median estimate of eight analysts compiled by Bloomberg in the past 28 days.
Prices of computer memory chips fell as demand for personal computers slowed. They may rebound this quarter as computer makers build up stocks for new models and demand rises for chips for tablet computers and smartphones, analysts including Kim Young Joon at LIG Investment & Securities Co. said.
Earnings were hurt by the impact of a lost legal case in which Hynix paid 160.7 billion won to Hyundai Securities Co., Park Seong Ae, a company spokeswoman, said by telephone.
Operating profit, or sales minus the cost of goods sold and administrative expenses, was 417.6 billion won in the three months ended Dec. 31 on a consolidated basis and sales were 2.75 trillion won.
Chip Prices
The price of the benchmark DDR3 1-gigabit dynamic random- access memory chips, known as DRAM, fell about 47 percent in the fourth quarter amid weak demand for personal computers, according to data from Taipei-based Dramexchange Technology Inc., operator of Asia’s largest spot market for semiconductors. Benchmark 32-gigabyte NAND flash memory prices slipped 2.6 percent in the period, according to Dramexchange.
Dynamic random-access memory chips are used to store data temporarily to help devices run multiple programs at the same time. NAND flash memory saves data including songs and pictures in gadgets such as smartphones, MP3 players and digital cameras.
Memory chip prices may start rising again in the first quarter as computer manufacturers restock parts before rolling out new models featuring Intel Corp.’s latest chip design, according to Kim Young Chan, an analyst at Shinhan Investment Corp. in Seoul.
Prices for NAND flash memory will continue to outperform DRAM in 2011, and Hynix would need to increase NAND capacity quickly to capitalize on the boom, David Choi, an analyst at KTB Securities Co. in Seoul, said in a Jan. 6 report.
Capital Expenditure
Chipmakers’ capital expenditure on NAND will beat spending on DRAM for the first time this year amid a race to develop smaller memory devices, C.J. Muse, a New York-based analyst at Barclays Plc., said in a report last month.
“Hynix’s quarterly earnings will likely have bottomed out in the fourth quarter,” Lee Ka Keun, a Seoul-based analyst at Hana Daetoo Securities Co., said in a Jan. 5 report. “DRAM prices are forecast to fall at a slower rate, and NAND will still get strong demand.”
Hynix plans to increase capital investment to 3.4 trillion won in 2011 from 3.38 trillion won last year, the company said Jan. 6.
--Editors: Vipin V. Nair, Brett Miller
To contact the reporters on this story: Jun Yang in Seoul at jyang180@bloomberg.net Saeromi Shin in Seoul at sshin15@bloomberg.net.
To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net
Source :http://www.businessweek.com/news/2011-01-26/hynix-profit-falls-83-on-chip-prices-legal-case.html