Hynix reports first net profit in 2 years on chips

SEOUL, South Korea (AP) -- Hynix Semiconductor Inc. recorded its first quarterly net profit in two years as prices for memory chips rose in a rapidly recovering market.

AP - Employees of Hynix Semiconductor Inc. work by the company's logo at its headquarters in Seoul, South Korea, Friday, ...

The company said in a regulatory filing it earned 246.28 billion won ($207.25 million) in the three months ended Sept. 30. It posted a net loss of 1.67 trillion won a year earlier. The profit ended seven straight quarters of losses.

Icheon, South Korea-based Hynix said third quarter sales rose 15 percent to 2.12 trillion won from 1.84 trillion won the year before.

Hynix attributed the results to a "faster than expected market recovery." The company said average selling prices for DRAM, or dynamic random access memory chips, increased 26 percent from the previous quarter. Prices for NAND flash memory chips rose 4 percent.

Hynix is the world's second-largest manufacturer of DRAM chips, used mostly in personal computers, and ranks No. 3 in NAND, used in digital devices such as cameras and music players.

"The memory market seems to have emerged from a long downturn," Kim Min-chul, Hynix's chief financial officer, told analysts on a conference call. "Seasonal demand for memory products was stronger than expected," he said.

The highly cyclical memory chip industry has suffered due to chronic oversupply. German memory-chip maker Qimonda AG declared bankruptcy in January.

A rebound, however, has been gaining steam.

Research company iSuppli Corp. said in a report Thursday that the DRAM industry in the second and third quarters of this year recorded its "strongest sequential growth in revenue and prices seen in at least five years, indicating that the recent market rebound is real and is likely to continue into 2010."

Hynix, which competes with South Korean rival Samsung Electronics Co. and Japan's Toshiba Corp., announced in December last year that it would make massive cost cuts to free up cash to help it recover from what it termed a "management crisis" due to the industry slump and the global economic slowdown.

The company slashed the pay of top officials, cut the number of executives, encouraged workers to quit voluntarily and made all employees take two weeks of unpaid leave earlier this year.

Hynix also received 800 billion won in fresh capital via loans from banks and through a share offering.

Shares in Hynix, which released earnings results before the stock market opened, fell 0.3 percent to 18,750 won in afternoon trading.