The semiconductor market is facing an unprecedented crisis. Semiconductor companies are experiencing a sharp decline in sales due to a slowdown in the economy, inflation, a decline in consumer goods demand, and falling memory prices. With the US administration's sanctions on the Chinese semiconductor industry also exacerbating the crisis, the management strategies of domestic semiconductor companies are becoming more crucial than ever.

SK Hynix held a business performance conference on the 26th and released its third-quarter results. The company announced that for the third quarter of this year, it recorded sales of KRW 10.9829 trillion, operating profit of KRW 1.6556 trillion (operating profit margin of 15%), and net profit of KRW 1.1027 trillion (net profit margin of 10%). Compared to the second quarter, sales decreased by 20.5% and operating profit decreased by 60.5%.

SK Hynix analyzed that its sales decreased compared to the previous quarter due to a decline in both sales volume and prices as demand for DRAM and NAND products became sluggish amid a worsening global macroeconomic environment. In addition, the company explained that although cost competitiveness improved by increasing the sales ratio and yield of the latest 10nm 4th generation DRAM (1a) and 176-layer 4D NAND, the operating profit also decreased significantly as the price decline was greater than the cost reduction.

In its earnings announcement that day, SK Hynix diagnosed that the memory semiconductor industry was facing an unprecedented downturn due to continued uncertainty in the business environment. This was due to decreased shipments from companies producing PCs and smartphones, which are key memory suppliers.

However, SK Hynix predicted that while demand for memory for data center servers will decline in the short term, it will continue to grow steadily in the medium to long term. This is because large data center companies (hyperscalers) are continuing to invest in emerging industries such as AI, big data, and the metaverse as they grow in scale. Accordingly, SK Hynix emphasized, "As we are leading the way in the latest DRAM technologies, such as high-bandwidth products like HBM3 and DDR5/LPDDR5, our position in terms of long-term growth will be solidified."

The company also added, “We developed the industry’s first 238-layer 4D NAND in the third quarter of this year, and we are confident that we will continue to increase profitability by securing cost competitiveness by expanding mass production next year.”

Meanwhile, SK Hynix forecasts that supply will continue to exceed demand for the foreseeable future. Accordingly, the company has decided to reduce its investment next year by more than 50% compared to this year's estimated investment of around 10 trillion won.

SK Hynix also announced that it plans to reduce production of relatively low-profit products in the future. The plan is to maintain this trend of reduced investment and production for a certain period of time to normalize the market supply and demand balance.

SK Hynix President and CEO Jong-won Noh said, “Based on our history of always turning crises into opportunities, we will overcome this downturn and leap forward as a true leader in memory semiconductors.”