Shares of SK Hynix Inc. are on a roll, fuelled by the growing prospects of its winning an interest in Toshiba Corp.’s NAND flash memory business, which is the world’s second-largest, and surging profit from its own 3D non-volatile memory in explosive demand to power big data and broader applications in smart devices.
The stock has renewed record highs for the last seven days on expectations that its operating profit for the last three months of the year would top 4 trillion won ($3.5 billion).
From the beginning of September, SK Hynix shares soared 25.8 percent to a fresh closing peak of 86,300 won as of Monday, far outpacing the gains of 0.7 percent in the Korean composite stock price and 15.8 percent in its bigger chipmaking rival Samsung Electronics during the same period.
Shares of SK Hynix finished Tuesday at 82,100 won, down 4.87 percent from profit-taking.
The company, which is the world’s second largest dynamic random access memory (DRAM) maker, in recent years has been reinforcing the NAND business in efforts to bolster its presence in the burgeoning market where it ranked the fifth until last year.
Its flash business outlook gained another major traction from the likelihood of its strategic involvement in Toshiba’s memory division. The consortium where SK Hynix would invest in is expected to clench a 50.1 percent stake in Toshiba’s NAND flash business.
SK Hynix, traditionally strong in DRAM mostly used in PCs as the chip needs power to store memory, began producing NAND chips from 2004.
It invested heavily to expand its capacity in 3D NAND, and as of the first quarter commanded the fourth rank, data from IHS showed.
It began mass-production of fourth-generation NAND in 72-layer 256 gigabit (Gb) capacity, catching up with the industry leader Samsung Electronics which was the sole chipmaker capable of turning NAND chips in such capacity and multi-layers.
SK Hynix’s operating income from the NAND flash memory business is anticipated to hit 1.8 trillion won this year, an 87-fold jump from 21 billion won in a year ago period, said Korea Investment & Securities. NAND contribution to its income from chip sales is expected to jump from 0.6 percent in 2016 to 14.1 percent this year. Profit against sales in NAND is estimated at 25.6 percent this year, compared with a mere 0.5 percent last year.
Flash memory prices have strengthened as latest smartphones require bigger memory for video and music storage.
The company’s profit also would benefit from strong DRAM prices.
According to market data provider FnGuide, SK Hynix’s operating profit is estimated at 3.8 trillion won in the third quarter - up whopping 426.6 percent jump from a year-ago period - and at a fresh quarterly record of over 4 trillion won in the final three-month period.
By Moon Il-ho
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