Hynix reports 69% y/y sales increase; breaks ground on $4.1B, 12-inch fab

By Ann Steffora Mutschler, Senior Editor -- Electronic News, 4/26/2007

Seoul, Korea-based DRAM giant Hynix Semiconductor Inc. announced revenues for its Q1 ended March 31 of $2.6 billion (2.4 trillion won), a 6 percent sequential drop from $2.8 billion (2.6 trillion won), but up a whopping 69 percent from $1.6 billion (1.4 trillion won) in Q1 2006.

The company cited deterioration in average selling prices of both DRAM and NAND flash memory as cause for the modest sales drop.

The price of DRAM products dropped by 27 percent quarter-on-quarter, but the decline was offset by 45 percent bit growth, consequently increasing DRAM revenue by 4 percent sequentially.

Also, the company said the fast ramp up of its 12-inch fabs, capacity shift from NAND flash to DRAM, productivity improvement, and the smooth transition to 80-nm technology all contributed to more than expected DRAM bit growth in Q1.

However, for NAND flash, revenue decreased by 42 percent due to the severe sequential price drop of 44 percent without volume growth.

The flat bit growth was primarily due to the capacity shift from NAND to DRAM during the quarter and some delay of 60-nm technology, Hynix noted.

Q1 operating profits were $480.6 million (446 billion won), down by 48 percent quarter-on-quarter with 18 percent of operating profit margin, but an increase by 24 percent from $387.7 million (360 billion won) in Q1 2006.

Q1 net profits were $462 million (429 billion won), with 18 percent of net profit margin, marking 15 consecutive quarters of profits since Q3 2003. Adding depreciation and amortization expenses to operating profits, EBITDA was $1 billion (935 billion won) with EBITDA margin of 38 percent.

In other news from the Korean memory provider, Hynix said it has broken ground on a front-end, 12-inch wafer fabrication facility in Cheongju, North Chungcheong Province, Korea.

Hynix said it expects the new “M11” manufacturing facility will manufacture high-density NAND Flash memory devices on sub-48-nm process technology.

The company aims to complete construction in Q2 2008 and commence mass-production in Q3 2008, investing a total of $4.1 billion (3.8 trillion won) for the project.

M11 will be constructed on the 108,687 square meter site located in the Cheongju Industrial Complex where Hynix currently operates two manufacturing facilities.

Hynix also owns manufacturing facilities in Icheon and Cheongju, Korea; has a manufacturing site in Eugene, Ore., and Wuxi, Jiangsu Province, China through its joint-venture with STMicroelectronics.

Hynix currently has two 12-inch fabs among its own facilities and acquires additional 12-inch wafers through its foundry supply agreement with ProMos in Taiwan.