SK Hynix’s profit nosedives from the downturn in memory chip market

South Korean chipmaker SK Hynix said on Wednesday that it posted 10.98 trillion won in revenue and 1.65 trillion won in operating income for the third quarter.

Revenue dropped 7% from a year ago but operating income dipped by 60% over the same time period.

SK Hynix said it experienced low demand for its DRAM and NAND memory chips amid the worsening global economy.

Earlier this month, compatriot Samsung said it expected operating profit to drop 31.73% from a year ago, its first profit drop in nearly three years.

The South Korean tech giant’s profit drop is also expected to have been caused by low demand for memory chips by analysts after years of high demand during the pandemic.

SK Hynix said it plans to reduce its spending on its chip facilities by over 50% next year than it originally planned.

During the third quarter, the company saw the shipment of its PC and smartphone manufacturing customers decline.

However, while its server customers also purchased fewer chips during the quarter, SK Hynix noted that the sector is expected to grow in the mid- and long-term from “hyperscalers” __ cloud service providers that are massively scaling the computing capacities of their data centers.

The South Korean chipmaker said it also plans to focus on high-end chips such as its 238-layer NAND and 10-nanometer DRAM chips going forward up to next year to protect its margins.