SK Hynix Inc., the world’s second-largest memory chipmaker, will stand out among its domestic and global technology peers in the scoreboard of profitability from core operation in the first quarter when it releases its income statement for the first three months of the year on April 25.

Analysts expect the company to report its best-ever three-month operating profit of over 2 trillion won ($1.75 billion). The consensus complied by FnGuide places the company’s revenue at 5.39 trillion won on an operating profit of 2.22 trillion won in the January-March period. Its Q1 operating profit would be four times higher than a year earlier.

Moreover, its operating profit margin - the leftover revenue after costs of goods and operating expenses - for the first quarter is estimated at 37.5 percent. The previous peak was 40 percent achieved in the second quarter of 2004. At that time, quarterly sales were less than 2 trillion won against operating income of 680 billion won. The strong results achieved in the first quarter, which is traditionally off-season for the electronics market, suggest that the earnings will remain high throughout the year, said an industry source.

As of the end of last year, dynamic random memory (DRAM) chips typically used in PCs remained as its mainstay accounting for 72 percent of the chipmaker’s total revenue. The remainder consists of 25 percent from NAND flash and 3 percent from non-memory semiconductor sales.

Prices of DRAM chips used in personal computers and smartphones recently surged due to tight supply. As of the end of March, the mainstream DRAM (DDR3 4 gigabyte) price was $2.75, up by more than 100 percent from the previous year. The price of NAND flash (64 gigabytes) used in large storage devices climbed 76 percent in the same period due to strong demand for flash memory as reliable alternative to hard disc drive and memory for high-performance mobile devices. It is cheaper to make DRAM, and the sharp spike in its prices would have benefited Hynix more as Samsung has moved its focus to more high-end chips.

In terms of operating profitability, SK Hynix did better than Samsung Electronics whose margin jumped to 19.8 percent in the first quarter from 13.4 percent a year ago. The operating margin of Samsung Electronics’ comparable semiconductor division was 33.3 percent in the fourth quarter of last year. Apple’s operating margin stood at over 20 percent throughout last year and rose to 29.8 percent in the fourth quarter.

Shares of SK Hynix closed Wednesday at 49,000 won, up 150 won from the previous session.

By Moon Il-ho

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