As memory manufacturers enter the middle of a semiconductor downcycle, their deficits are widening. SK Hynix has shocked the market by announcing its first-quarter results and recording a record-high operating loss.

SK Hynix held an earnings conference on the 26th and announced its business results for the first quarter of 2023. In the first quarter, sales were recorded at 5.0881 trillion won, an operating loss of 3.4023 trillion won (operating loss rate of 67%), and a net loss of 2.5855 trillion won (net loss rate of 51%), resulting in an increased operating loss deficit compared to the previous quarter.

SK Hynix stated, “As the memory semiconductor downturn continued into the first quarter, weak demand and a downward trend in product prices persisted, resulting in a decrease in revenue and an expansion of operating losses compared to the previous quarter,” adding, “However, we expect revenue performance to rebound in the second quarter as sales volume gradually increases from the first quarter low.”

SK Hynix projected that the market environment would improve starting in the second half of the year, as customer inventories turned downward in the first quarter and inventories held by suppliers are also expected to decrease from the second quarter due to memory production cuts.

The company analyzed that the growing market size for high-performance servers for AI, such as ChatGPT, and the increasing number of customers adopting high-capacity memory will also have a positive impact on the market.

Accordingly, the company decided to increase revenue by focusing on sales centered on high-performance DRAM such as server DDR5 and HBM, 176-layer NAND-based SSDs, and uMCP products.

SK Hynix plans to continue investing in the latest memory products used in industries that will lead future market changes, such as AI, even as it reduces overall investment across the company. Along with this, the company plans to invest in preparing for mass production using processes that are more cost-competitive than existing ones, such as 10-nanometer class 5th generation (1b) DRAM and 238-layer NAND, and will make every effort to ensure that performance can rebound quickly when market conditions improve.

SK Hynix Executive Vice President (CFO) Kim Woo-hyun said, “As we have secured world-class competitiveness in product lineups such as DDR5/LPDDR5 and HBM3, where demand growth is set to accelerate starting this year, we will solidify our leadership in the premium market with these products as our focus.”

Vice President Kim added, “It is true that the memory market environment remains challenging, but it appears to be passing the bottom. Anticipating that the market will soon find a balance between supply and demand, we will do our utmost to restore corporate value by focusing on enhancing profitability and technological development.”