SEOUL (1) – SK Hynix (000660.KS) warned on Thursday that demand for chips will stay volatile, whereas restrictions on world motion, if extended, might disrupt manufacturing, gross sales and product growth throughout the trade.

FILE PHOTO: Worker walks previous the brand of SK Hynix at its headquarters in Seongnam, South Korea, April 25, 2016. REUTERS/Kim Hong-Ji/File Picture

The South Korean chipmaker, which counts Apple Inc (AAPL.O) amongst its clients, posted a 41% drop in quarterly profit, however beat estimates by a big margin as server demand as a result of coronavirus-driven shift to working from house partly offset weak smartphone enterprise.

SK Hynix reported an working profit of 800 billion gained ($649 million) within the January to March interval, increased than a Refinitiv SmartEstimate of 474 billion gained, however nonetheless properly under an working profit of 1.four trillion gained a 12 months earlier.

“There are rather a lot of uncertainties concerning the outlook for provide and costs for servers within the second half,” Cha Jin-seok, SK Hynix’s chief monetary officer, informed a convention name.

Whereas the worldwide smartphone market is anticipated to submit a sharper decline this 12 months than final 12 months, the chipmaker mentioned it’s optimistic about demand for servers and PCs as extra persons are at house, boosting demand for on-line training, video streaming and e-commerce.

“The most important issue to our demand forecast is the stablisation of COVID-19 and the restoration timing of world financial exercise. If the financial recession is extended, we will’t rule out that even reminiscence demand for servers might decelerate,” Cha mentioned.

SK Hynix shares dipped 0.95%, lagging a 0.76% rise within the wider market .KS11.

CURRENCY TAILWIND

SK Hynix mentioned shipments of DRAM chips, utilized in smartphones, PCs and servers, to stay flat within the present quarter from the earlier quarter.

“Its forecast is decrease than the market anticipated, and SK Hynix will see an even bigger impression from coronavirus impression on cell phones, regardless of strong server demand,” Park Sung-soon, an analyst at Cape Funding & Securities, mentioned.

Abroad friends, which have just lately reported sturdy first-quarter earnings, have additionally sounded a cautious be aware concerning the present outlook.

Texas Devices Inc (TXN.O) forecast current-quarter earnings largely under Wall Road estimates on Tuesday, whereas Taiwan Semiconductor Manufacturing Co Ltd (TSMC) (2330.TW) trimmed its full-year income outlook.

SK Hynix mentioned its first-quarter income rose 6% to 7.2 trillion gained.

A weaker South Korean forex, which fell to its lowest stage since 2009 in mid-March, supplied a tailwind for South Korean exporters like Samsung and SK Hynix by boosting the worth of abroad income when repatriated.

SK Hynix’s larger rival, Samsung Electronics (005930.KS), additionally earlier this month flagged forecast-beating working profit for the January to March quarter.

Reporting by Hyunjoo Jin and Heekyong Yang; Extra reporting by Joyce Lee and Joori Roh; modifying by Richard Pullin