SK Hynix has become the first memory chipmaker to claim that the market has hit bottom during the first quarter.
The memory chipmaker on Wednesday reported 3.4 trillion won in operating loss.
But the South Korean chipmaker said the company is expecting a rebound after the second quarter.
Analysts and securities companies have said in their prior reports that the market conditions will improve during the second half of the year without mentioning a bottom.
Micron, unlike SK Hynix, during its conference call for its fiscal first quarter last month, said that the situation is expected to improve gradually while operating margin rate and cash flow will be in the negative for the entire year.
SK Hynix, on the other hand, proposed three reasons why the market will recover within the year.
First is inventory. While its first-quarter inventory asset amounted to 17.18 trillion won, a 9.7% increase from the previous quarter, the company said it was controlling its production output flexibly for products it has high inventory for.
Effects of memory chipmakers Samsung, SK Hynix and Micron reducing their production output will also take effect in the second quarter, SK Hynix claimed, which means these companies will see their inventory asset peak within the first half of the year.
Second is price. SK Hynix said the average sales price for its DRAMs dropped late-10% from the previous quarter. The rate of drop has slowed compared to the third quarter of the fourth quarter last year, the company said. The chipmaker expects the rate of drop in price to further slow down up to the second quarter.
In demand for these memory chips, those handed for desktop PC were expected to drop but these will be offset by growth in notebooks and tablets, SK Hynix said in its forecast. In smartphones, demand is expected to grow for flagships. In servers, due to trends such as ChatGPT, the shift to DDR5 is expected to accelerate, SK Hynix said. Ultimately, demand for DRAM and NAND will recover this year, though, at a small rate, SK Hynix said.
Third is bit growth. SK Hynix expected bit growth in the second quarter to offset the drop in the first quarter of double digits. The company cited the change in customer purchase patterns, where some customers are buying more chips in the second quarter in preparation of market recovery during the second half of the year. SK Hynix was also receiving customer queries on whether memory chip prices will increase after hitting bottom.
Spending will be also focused on future products such as Gen 5 10nm DRAM and 238-layer NAND that will launch next year.
