SK Hynix Profit Beats Estimates as Memory Chip Prices Rally (1)

(Bloomberg) -- SK Hynix Inc., a supplier of memory chips to Apple Inc., posted third-quarter profit that beat analysts’ estimates as increased demand and reduced inventories fed a rally in semiconductor prices.

Operating income was 726 billion won ($642 million) in the three months ended September, the Icheon, South Korea-based company said Tuesday. That compares with the 660.4 billion-won average of estimates compiled by Bloomberg.

SK Hynix expects demand for DRAM memory chips will be maintained on shipments for mobile devices and personal computers. Apple, Hynix’s biggest customer, released new iPhones last month and Chinese vendors are adding premium components to stimulate sales.

“Demand was higher than expected,” Lee Seung-woo, a Seoul-based analyst at IBK Securities Co., said before the announcement.

The company’s shares rose 1.7 percent to 40,850 won as of 9:18 a.m. in Seoul, extending this year’s advance to 33 percent. The stock slid 36 percent in 2015.

Apple provides about 8 percent of Hynix sales, according to data compiled by Bloomberg.

Prices of benchmark DDR3 4-Gb dynamic random access chips rose to $2.01 as of Sept. 30 compared with $1.73 a quarter earlier, according to InSpectrum Tech Inc. The flash NAND market will sustain a positive trend, company said.

Hynix posted net income of 596.8 billion won, beating estimates of 498.1 billion won.

(Updates with share price reaction in fifth paragraph.)

To contact the reporter on this story: Hooyeon Kim in Seoul at hkim592@bloomberg.net. To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan

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