|Bid||95,700.00 x 0|
|Ask||95,800.00 x 0|
|Day's Range||94,600.00 - 96,100.00|
|52 Week Range||62,400.00 - 106,000.00|
|Beta (5Y Monthly)||0.62|
|PE Ratio (TTM)||N/A|
|Earnings Date||Apr 23, 2020 - Apr 28, 2020|
|Forward Dividend & Yield||1,000.00 (1.01%)|
|Ex-Dividend Date||Dec 27, 2019|
|1y Target Est||88,271.00|
Oct.23 -- Sanjeev Rana, senior analyst at CLSA, discusses SK Hynix earnings and they mean for the chip sector. He speaks on “Bloomberg Daybreak: Asia.”
South Korean chipmaker SK Hynix said on Thursday that 800 of its workers had quarantined themselves as a precautionary measure to prevent the spread of the coronavirus, but its production in the city of Icheon has not been affected. The move came after one trainee had close contact with a virus patient in the southeastern city of Daegu, the epicenter of an outbreak in South Korea. SK Hynix, the world's No.2 memory chipmaker which counts Apple Inc and Huawei among its customers, said another trainee also had symptoms of pneumonia.
South Korea's SK Hynix, the world's No.2 memory chip maker, warned a new virus outbreak in China could pose a threat to chip production and said it would sharply reduce annual investment after posting a steep fall in quarterly profit. Manufacturers have suspended production in China and airlines canceled flights, disrupting supply chains. "We are preparing a contingency plan," SK Hynix finance chief Cha Jin-seok told an earnings call on Friday.
(Bloomberg) -- Samsung Electronics Co. reported a 38% decline in profit due to falling memory chip prices, a warning sign for the global technology industry as it navigates trade tensions and the coronavirus outbreak.Net income tumbled to 5.23 trillion won ($4.4 billion) for the three months ended December, compared with the 5.31 trillion won average of projections. The miss is a surprise because Samsung carefully orchestrates earnings, including reporting preliminary numbers a few weeks before final results. The early numbers this month beat analyst estimates.Samsung has been struggling with a stubborn slump in the memory chip business, historically its most profitable division, and said the weakness may affect first quarter results. The company also flagged soft demand in the display business for some premium mobile screens and a bigger loss on large displays because of sliding LCD prices.“There are too many factors that need to be considered to conclude that we have entered into a definite demand upcycle,” said Jinman Han, senior vice president of the semiconductor business at Samsung, highlighting macroeconomic and geopolitical uncertainties that may have a negative impact in the future.The coronavirus that began in China has closed stores and factories in the country, the manufacturing base for much of the tech industry. Several companies, including Apple Inc., have said they are uncertain how the outbreak will affect them.Samsung shares fell 3.2% in Seoul. They had increased 5.9% this year through Wednesday, after rising about 44% in 2019. Operating profit was 7.16 trillion won on sales of 59.9 trillion won, the company said, in line with preliminary numbers released earlier this month.Apple, a rival and customer, reported strong earnings this week, sending shares to a record in U.S. trading. A surge in iPhone sales pushed the Cupertino, Calif.-based company into an approximate tie with Samsung for smartphone shipments in the fourth quarter, according to market researchers.Earlier this month, chip giants Taiwan Semiconductor Manufacturing Co. and Intel Corp. provided bullish outlooks for 2020, driven by demand for cloud-computing centers and fifth-generation smartphones.Samsung, SK Hynix Inc. and Micron Technology Inc. together control more than 90% of the market for dynamic random access memory, or DRAM, chips, used in everything from data servers to smartphones. Spot prices of DRAM and NAND started increasing in December after getting hammered for a year amid rising trade tensions between the U.S. and China as well as plateauing smartphone sales.The chip industry has been anticipating a recovery as the roll-out of fifth-generation wireless technology spurs higher demand for memory and greater speeds to process data. Samsung did say there are signs of recovering demand from data center customers and wireless operators.Contract prices for 32-gigabyte DRAM server modules fell about 5.9% in the December quarter, narrower than the 14% slide of the September quarter, according to InSpectrum Tech Inc. Prices for 128-Gb MLC NAND flash memory chips held steady in the final three months of 2019.“Memory-chip suppliers still have a high level of inventories,” said Lee Joo-wan, research fellow at Hana Institute of Finance. “As the first half of the year is off-season, it may take time for recovering prices to be reflected in the performance of suppliers.”Samsung’s smartphone division had a stronger quarter, posting 2.52 trillion won in operating income, up from 1.51 trillion won a year earlier. Although the total shipments of smartphones slightly decreased, high-end devices such as the Galaxy Note 10 and Galaxy Fold boosted profits in the fourth quarter.The average selling price of Samsung handsets and tablets was $216 in 4Q, which the company forecasts will increase this quarter as it launches new flagship and premium models. Samsung’s new clamshell-type foldable phone, which will be unveiled Feb. 11, is expected to further fuel growth, said Greg Roh, senior vice president at HMC Securities.Samsung’s operating profit from its display business was about 220 billion won, down from about 970 billion won a year earlier. The company is investing heavily in flexible organic light-emitting diode panels, upgrading its technology to ward off rising competition from Chinese suppliers such as BOE Technology Group Co.The consumer electronics unit, which includes TVs and appliances, had operating profit of about 810 billion won.(Updates with closing share price in sixth paragraph)To contact the reporter on this story: Sohee Kim in Seoul at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Peter Elstrom, Vlad SavovFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
SHANGHAI/SEOUL, Jan 28 (Reuters) - Facebook Inc and other global companies including LG Electronics Inc and Standard Chartered Plc are restricting travel to China, as the death toll from a flu-like virus rose above 100 on Tuesday. Airlines are also cancelling flights and adjusting schedules as a growing number of countries raise travel warnings to not just Hubei province where the new coronavirus broke out, but also to the rest of mainland China. The United States warned on Monday that Americans should "reconsider" visiting all of China, while South Korea elevated its travel warning on Tuesday, advising its citizens to refrain from visiting China.
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of SK Telecom Co., Ltd. Hong Kong, January 23, 2020 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of SK Telecom Co., Ltd. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
(Bloomberg) -- A cap on Samsung Electronics Co.’s weight in a Korean equity index could kick in earlier than planned, triggering fears that billions of dollars will exit the stock.Instead of the bi-annual adjustment, the Korea Exchange is considering putting a 30% limit on Samsung’s weighting on the Kospi 200 Index earlier due to the stock’s recent rally, said Ahn Kil-Hyun, the manager of the team that oversees the index. Given the gauge’s popularity among passive funds, research provider Smartkarma’s Douglas Kim expects between $1.2 billion and $1.5 billion in net selling of Samsung shares as a result. The bourse adopted the 30% cap in June 2019 to prevent a potential plunge in the entire market due to a single stock, rebalancing every June and December. Smartkarma says there’s an 80%-90% chance the rule will kick in for Samsung in March or April.“It is true that the Kospi 200 Index is being distorted because of Samsung,” Ahn said. “We just want to minimize shocks to the market.”Ahn added that details have yet to be confirmed, including the frequency of rebalancing. The Kospi 200 index is a market-cap weighted gauge provided by the Korea Exchange. About $30 billion passive funds track the index, according to Gilbert Choi, analyst at NH Investment & Securities. After soaring 44% in 2019 and 9.5% so far this year, Samsung currently accounts for 33.1% in Kospi 200 Index, up from about 28% in September.A Samsung Electronics spokesman declined to comment on the exchange’s discussions.The potential forced selling in Samsung shares shows decisions by index providers have grown increasingly important for stock markets in recent years, thanks to the rising popularity of passive investment strategies.Samsung’s outsized influence on the Korean gauge compares with just a 4.8% weighting of the U.S.’s largest company, Apple Inc., on the S&P 500 Index.“I’m not sure if such a cap can prevent a distortion in the stock market, as the cap itself could be a factor for distortion,” said Hyun Choi, head of equities at Barings Korea. “It may result in investors increasing exposure to other large caps in their portfolio, which can lead to price distortion.”SK Hynix Inc., a peer of Samsung and the second-biggest member on Kospi 200, has a 6.4% weight on the measure, followed by Naver Corp.’s 2.65% and Hyundai Motor Co.’s 2.09%.Other global indices including DAX and Euro Stoxx 50 have market-cap restrictions for a single stock, with both having a limit of 10% for any one stock and they are adjusted on a quarterly basis, according to a note from Smartkarma.(Updates Samsung’s latest weighting, share movement in 5th paragraph)\--With assistance from Abhishek Vishnoi, Hitomi Kimura and Sohee Kim.To contact the reporter on this story: Heejin Kim in Seoul at firstname.lastname@example.orgTo contact the editors responsible for this story: Lianting Tu at email@example.com, Naoto HosodaFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- In what’s billed by local media as the “divorce of the century,” the chairman of South Korea’s third-largest conglomerate could wind up surrendering up to $1.2 billion of his shares to his aggrieved wife. Chey Tae-won has good reason to worry that judges won’t look kindly upon him: He’s already started a second family with a glamorous American-Korean internet sensation, not to mention his wife is the daughter of former President Roh Tae-woo. But it looks like this Hollywood-caliber split could have more repercussions in the boardroom than the bedroom.South Korea started restructuring its sprawling family-run conglomerates, or chaebol, as early as 2012. The program gained steam five years later, when it became a centerpiece of the campaign that swept President Moon Jae-in to power. Moon quickly installed a “chaebol sniper” to help unravel these overly complex corporations.With the economy now in the doghouse, there’s a growing sense that Moon’s agenda is flagging. Chaebol are trading at a 44.8% discount to their net asset value, according to CLSA Ltd., the steepest since 2011. Last September, Kim Sang-jo, the chaebol sniper, left the helm of Korea’s antitrust watchdog. Investors have grown impatient.If there’s any silver lining to Chey’s divorce, it’s that his wife, Roh Soh-yeong, might be able to deliver what Moon hasn’t. In a court filing early last month, she demanded 42.3% of Chey’s stake in SK Holdings Co., which would amount to 7.8% of the company. Such a transfer of ownership would push her husband’s voting rights below 20%, a golden threshold of control in Korea. Currently, Chey and his clan hold 26.7% of the company. To minority shareholders, a family feud would be music to their ears. The conglomerate’s holding companies are severely undervalued, so the arrival of Roh to the board may revive restructuring plans that had largely gone quiet. And even if she does nothing, Chey may want to boost his stake, just to ensure control. Such demand could lift stock prices and end up rewarding outside shareholders.Roh has a good shot of getting what she wants. SK was founded in 1953 by Chey’s father as a textile company, but the business took off after the pair got married in 1988, the year Roh’s father was inaugurated. As part of the government’s privatization drive, the group became the largest shareholder of state-owned Korea Mobile Telecommunications Corp., which eventually became SK Telecom Co. in 1994, a year after the former president left the office. Roh’s political connections quite possibly bolstered SK’s success, a savvy divorce judge may be inclined to reason.While SK’s telecom unit is no longer growing at the neck-breaking speed of the late 1990s, it holds the key that keeps Chey’s grip over his empire’s crown jewel — SK Hynix Inc. SK Holdings has a 26.7% stake in SK Telecom, which in turn owns 20.1% of the memory-chip maker, whose shares rallied 65% over the last year. Beyond the upside of a boardroom drama, there are few reasons to hold stock of SK Holdings or SK Telecom, particularly if exposure to the chipmaker is all investors want. Shareholders of SK Holdings have to suffer a conglomerate discount, twice, just for exposure to the crown jewel, which they can just as easily get by holding the stock directly. While investors enthusiastically chased after SK Hynix, betting on a cyclical upturn of memory chips this year, they have stayed away from the other two. Meanwhile, a price war in Korea for new 5G subscribers isn’t necessarily a good thing for operators like SK Telecom. The Chey-Roh drama isn’t the only ugly family feud that could be rewarding to outsiders. In December, shareholders enjoyed a surge in Hanjin Kal Corp. — another conglomerate whose units include flagship carrier Korea Air Lines Co. — after the founding patriarch's eldest daughter criticized her brother, who is now in charge of the family business. Heather Cho first gained global notoriety for the “nut rage” incident in 2014.In any other part of the world, investors would breathe a sigh of relief at signs of an amicable breakup – think Jeff and MacKenzie Bezos, for one. But in Korea, a messy split might just be the best outcome: The nastier these squabbles get, the better the chances executives will pony up and buy more voting rights. Company outsiders may never get much of a voice, but at least their shares will be more valuable.To contact the author of this story: Shuli Ren at firstname.lastname@example.orgTo contact the editor responsible for this story: Rachel Rosenthal at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- From sanctions to export restrictions, the rest of the world views China’s chip champions like Huawei Technologies Co. and ZTE Corp. with suspicion and skepticism. But inside the country, all investors see is a $300 billion-a-year golden opportunity. One could almost say that the Chinese have a chip on the shoulder by rewarding semiconductor startups with such a vengeance. Companies that have anything to do with the industry are among the year’s best performers. Of the 44 names classified as semiconductor stocks by the widely followed local index provider SWS Research, the average gain is a whopping 170%. They command $128 billion of market cap, backed by only $15.5 billion of annual sales.Brokers have been busy selling clients on the notion of import substitution. Last year, China imported $312 billion worth of integrated circuits, surpassing $300 billion for the first time. They’re the largest import category, accounting for 15% of the total pie and topping crude oil for the fourth consecutive year.So, the thinking goes, if the U.S. and its allies restrict chip component sales, big clients such as Huawei, which makes smartphones and 5G network equipment, will have no choice but to turn to domestic suppliers. Pile in now and wait for Donald Trump and trade nationalism to do the rest.At the same time, pricing power is gradually shifting back to chipmakers. Pinched by the U.S.-China trade war and the global economic slowdown that has ensued partly because of it, movers and shakers in the chip world have cut back their capital expenses. As a result, prices of memory chips have stabilized recently.We may start to see a price rebound in DRAM memory chips used in computer servers in early 2020, according to HSBC Holdings Plc. On Wednesday in the U.S., Micron Technology Inc. gave a strong sales forecast for the December quarter and told investors the worst of a slump in the memory chip industry is over. This seems like a global consensus. Share prices of South Korea’s Samsung Electronics Co. and SK Hynix Inc., for instance, soared lately. The Philadelphia Stock Exchange Semiconductor Index reached a record high. Seen in this context, perhaps Chinese chips’ melt-up isn’t all that extraordinary.There’s a big problem with this investment thesis, however. The $300 billion-a-year import substitution argument is essentially a bet on the total addressable market, a favorite phrase used in consulting firms’ case interviews. But when was the last time a Chinese company managed to capture a good portion of its market?The furthest China’s industrial sector has gotten toward an oligopoly is with its air-conditioner makers, and even these players — Midea Group Co. and Gree Electric Appliances Inc. of Zhuhai — don’t skip a beat in luring each other’s customers away. It’s rare in China when a few big companies dominate. Wherever there’s a golden nest, thousands enter and erode away any pricing power. So, what really is the quality of the stocks for investors if all they see are big sales numbers, but tiny profit margins?With Beijing actively promoting its nascent startups with state funds, it’s just a matter of time before China Inc. ruins the healthy supply and demand dynamics, not unlike what it did to the solar industry. Three-year-old Yangtze Memory Technologies Co., managed by the business arm of the prestigious Tsinghua University, President Xi Jinping’s alma mater, is only half a generation behind the global NAND flash memory leaders. Meanwhile, every business entity, including local government financing vehicles, is edging into chip making because it’s close to Xi’s heart and therefore to state-owned bank vaults. China is a huge market, with billions of dollars of opportunities opening up every year. But it’s also a place defined by its profitless prosperity, with companies battling like gladiators to their own demise. Investing based on the size of the overall arena completely misses that bloody reality. (Adds Micron’s sales forecast in the sixth paragraph.)To contact the author of this story: Shuli Ren at firstname.lastname@example.orgTo contact the editor responsible for this story: Patrick McDowell at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg) -- Micron Technology Inc. gave a strong sales forecast for the current quarter and told investors it’s through the worst of a slump in the memory-chip industry.Revenue will be as much as $4.8 billion in the fiscal second quarter, Micron said in a statement. Analysts had projected $4.76 billion, according to data compiled by Bloomberg. Adjusted earnings will be 35 cents a share, plus or minus 6 cents. Analysts estimated 40 cents a share on average.Wall Street has been predicting a recovery in demand and expects the market for computer and smartphone components will return to growth in the second half of next year. The results from Micron, the biggest U.S. maker of memory chips, confirmed this optimism.“We are optimistic that Micron’s fiscal second quarter will be the cyclical bottom for our financial performance,” Chief Executive Officer Sanjay Mehrotra said in the statement.Shares of the Boise, Idaho-based company rose about 3% in extended-trading following the report. They closed at $53.04 earlier on Wednesday, leaving them up 67% this year. The shares had rallied more than 10% in December.Net income in the period ended Nov. 28 fell to $491 million, or 43 cents a share, from $3.29 billion, or $2.81 a share, a year earlier. Revenue declined 35% to $5.14 billion.The company makes dynamic random access memory chips, which help processors crunch data in computers and smartphones, and Nand flash memory, which stores information in those devices.Under Mehrotra, Micron has pursued different markets for its chips to reduce wild swings in the balance of supply and demand. The company has so far been able to avoid the heavy losses it experienced as recently as 2016. At its lowest ebb in that year, the company burned through $1.3 billion in cash in a quarter, according to Mehrotra. If his projections for fiscal 2020 pan out, it will be the fourth year in a row the company has had positive free cash flow, the first time it has managed such a run.“Of course there will be cycles such as what we experienced in 2019,” he said in an interview. “But even in the most challenging environment Micron has delivered relatively strong results.”The U.S. government’s designation of Huawei Technologies Co. as a threat to national security has dented sales of Micron, which has been a major supplier to the Chinese company. Micron applied for a license to resume shipments arguing, like many of its U.S. peers, that the ban hurts American chipmakers because Huawei can get the same components from foreign rivals.Micron confirmed Wednesday that it “received all of the requested licenses that enable us to provide support for certain products” to Huawei for the Chinese company’s mobile and server businesses. Resuming that relationship will take time and Micron doesn’t anticipate “a material impact on our revenue for the next couple of quarters,’ the company said in the statement.Micron’s biggest competitors are South Korea’s Samsung Electronics Co. and SK Hynix Inc., which aren’t subject to U.S. export restrictions.(Updates with comments from CEO in the eighth paragraph.)To contact the reporter on this story: Ian King in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Andrew Pollack, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
South Korean exports in October fell for an 11th consecutive month and by the most in nearly four years as shipments to China kept slowing and computer chip prices plunged, data showed on Friday. South Korea, the first major exporting economy to release monthly foreign trade data, has been struggling especially hard from the prolonged U.S.-China trade war on top of already cooling global demand. Exports dropped for an 11th consecutive month and by 14.7% in October from a year earlier, the data showed, the biggest decline since January 2016 and worse than a 13.8% fall tipped in a Reuters survey.
(Bloomberg) -- Samsung Electronics Co. posted better-than-expected earnings and projected a gradual recovery in the memory chip market in 2020 as fifth-generation wireless technology rolls out globally.Shares in South Korea’s largest company climbed as much as 2% after it posted net income of 6.1 trillion won ($5.2 billion) for the September quarter, surpassing the 5.5 trillion won average of projections. Samsung, which reported a 56% slump in operating profit earlier this month, said it expects memory chip demand to gradually climb out of its funk in the fourth quarter and bounce back next year. The company foresees capital spending of 29 trillion won in 2019, about the same level as it was last year.Memory chip prices have stabilized and risen in part for seasonal reasons and in part because clients are buying to hedge against global macroeconomic uncertainty, said Samsung. Chipmakers such as SK Hynix Inc. have recently said the industry is bottoming out and is now on the verge of an upturn thanks to the adoption of new technologies such as fifth-generation networking.“We are seeing an improvement in the chip industry,” Kim Woon-ho, an analyst at IBK Securities Co., said in an Oct. 22 note. “It is expected that the DRAM prices will start to recover in the third quarter of 2020. We project a big jump in demand for server chips, while Fold models will become a new factor.”What Bloomberg Intelligence SaysSamsung’s semiconductor profit will likely keep falling through early next year, despite optimism surrounding an upturn in the memory cycle.\--Anthea Lai, TMT analyst. Click here for the research.Samsung’s smartphone business, which has weathered a series of setbacks in recent years, remained strong in the quarter, accruing 85 million unit sales in the third quarter. The recent Galaxy Note 10 flagship exceeded the sales of the previous year’s Note in the same period by “double digits,” according to the company, however Samsung is forecasting profitability of its mobile business will decline in the current quarter as it’ll need to ramp up marketing to prop up demand.The troubles faced by rival Huawei Technologies Co. in international markets have helped bolster Samsung’s mobile sales, with Counterpoint Research indicating that Samsung is absorbing Android users in major European countries, South America and the Middle East.Apple Inc.’s in-demand iPhone 11 is revitalizing demand for the Korean company’s most advanced displays. Samsung notes a “sustained drop in average selling price and demand for TV panels,” however its smaller smartphone displays are keeping that division buoyant and the company predicts robust demand as consumers look to upgrade their devices. 5G networking will help drive an upgrade cycle, says Samsung, and the rapid move to 5G in its home market has already contributed to its bottom line.Samsung’s Stock Is Signaling a Bottom for the Global Chip MarketSamsung shares have risen more than 30% this year, while the benchmark KOSPI has inched up 2%.(Updates with details from earnings call from second paragraph.)To contact the reporter on this story: Sohee Kim in Seoul at firstname.lastname@example.orgTo contact the editors responsible for this story: Edwin Chan at email@example.com, Vlad Savov, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The world's second-largest memory chipmaker, SK Hynix Inc , said 5G-enabled smartphones should help lift the global memory market out of the doldrums next year, as its third-quarter profit beat market expectations on Thursday. The South Korean rival to Samsung Electronics Co Ltd cautioned however that it would cut investment "considerably" in 2020 due to uncertainties over memory-chip demand and global trade tensions. Chipmakers have sent mixed signals about the demand outlook, with Taiwan's TSMC offering record investment plans for 2019 and 2020 on strong 5G smartphone sales, while Texas Instruments Inc gave a disappointing revenue forecast citing the U.S.-China trade war.
The world's second-largest memory chipmaker, SK Hynix Inc, said 5G-enabled smartphones should help lift the global memory market out of the doldrums next year, as its third-quarter profit beat market expectations on Thursday. The South Korean rival to Samsung Electronics Co Ltd cautioned however that it would cut investment "considerably" in 2020 due to uncertainties over memory-chip demand and global trade tensions. Chipmakers have sent mixed signals about the demand outlook, with Taiwan's TSMC offering record investment plans for 2019 and 2020 on strong 5G smartphone sales, while Texas Instruments Inc gave a disappointing revenue forecast citing the U.S.-China trade war.
Investing.com - South Korean chip giant SK Hynix Inc (KS:000660)’s share prices rose 2.3% on Thursday in Asia after reporting better-than-expected profit in the third quarter.
South Korea's SK Hynix Inc has started using a high-tech material from a Korean supplier in its chipmaking process, a company official said on Wednesday, shifting away from a Japanese product for the first time. A SK Hynix official said it had selected an unnamed Korean company to supply high-purity hydrogen fluoride (HF), which is used in etching silicon materials and cleaning chips. South Korean chipmakers have been looking for ways to cut their reliance on Japanese materials since Japan imposed curbs on exports of key input products into South Korea in July.
(Bloomberg) -- Micron Technology Inc. gave a disappointing quarterly profit forecast and warned that global trade tensions may prolong a memory-chip industry slump.The company projected adjusted earnings of 46 cents a share, plus or minus 7 cents, in the fiscal first quarter. Analysts estimated 49 cents a share on average, according to data compiled by Bloomberg. Revenue will be $5 billion, plus or minus $200 million, Micron also said. Analysts projected $4.78 billion.The chipmaker’s guidance means sales are on course to decline by more than 20% year-on-year for a fourth consecutive quarter. Micron’s stock fell almost 6% in extended trading following the report. The shares closed at $48.60 in New York trading earlier, leaving them up 53% this year.The Boise, Idaho-based company warned that it’s vulnerable to the U.S.-China trade war and said recent improvements in orders may not be driven by sustainable demand. Micron has been particularly hurt by U.S. export restrictions that limit sales to China’s Huawei Technologies Co.Micron Chief Executive Officer Sanjay Mehrotra said the company has applied for licenses to ship more products to Huawei, but there have been no decisions on those requests yet. If “restrictions against Huawei continue and we are unable to get licenses, we could see a worsening decline in our sales to Huawei over the coming quarters,” he added.Recent increases in chip prices and orders led some analysts to predict that the market for computer memory and flash chips was poised to improve. Others worry that those gains won’t last. South Korea’s Samsung Electronics Co. and SK Hynix Inc., two of the largest memory-chip makers, are suffering from a shortage of materials from Japan. That could limit supply, but some customers have been building inventory to mitigate this risk.“In recent months, we have seen increased demand from customers headquartered in mainland China, some of whom could be making strategic decisions to build higher levels of inventory in the face of increased trade tensions between the U.S. and China, as well as Japan and Korea,” Mehrotra said.The CEO has told investors that Micron will avoid the boom-and-bust cycles that ravaged the memory-chip business in the past. The market is more stable with fewer suppliers and more diversity in customers.In fiscal 2019, Micron made less than half of the record $14 billion profit it achieved in 2018. In 2020, analysts on average estimate net income will slump again to about $3 billion, before increasing again in 2021. The company had an annual loss as recently as 2016.Net income was $561 million, or 49 cents a share, in the fiscal fourth quarter. That was down from $4.33 billion, or $3.56 a share, a year earlier. Revenue came in at $4.87 billion versus $8.44 billion in the same period last year.To contact the reporter on this story: Ian King in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Alistair BarrFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Asian countries are looking for catalysts beyond China to drive their economies as the Sino-U.S. trade war forces Chinese demand for their exports to shrink. Luring foreign companies to their shores, finding ways to boost domestic consumption and scouring for alternate export markets are part of that policy mix as China's neighbours cope with flagging demand from the mainland, hitherto a large market for Asia in the regional supply chain. Malaysia set up a panel to fast-track investments to woo businesses, and said it approved more than $500 million in proposals this month.
(Bloomberg) -- Terms of Trade is a daily newsletter that untangles a world embroiled in trade wars. Sign up here. Japan is delaying the shipment of a key material used in the production of memory chips in South Korea, according to a senior government official in Seoul.The liquid hydrogen fluoride -- a highly purified chemical used to refine chips in production -- has yet to be shipped, even though Japan has approved exports of its gas form, the official said, declining to be identified because the information has not been made officially public. Japan may still green-light shipment because a 90-day window for review hasn’t yet closed, the official added.On July 4, Japan imposed tougher requirements on export to South Korea of three classes of materials used in the production of semiconductors and displays, and the country has since approved shipments covering hydrogen fluoride along with things like photoresists, used for developing advanced chips. The delay in liquid hydrogen fluoride prolongs headaches for Korean companies like Samsung Electronics Co. and SK Hynix Inc., both dependent on a steady supply from Japan.Korea’s semiconductor businesses are said to have sufficient reserves to weather short-term trade limitations. But their long-term health will demand either a restoration of normal trading with Japanese partners or the development of homegrown alternative supplies, such as those LG Display Co. has been working on, according to multiple reports.Read more: Japan-Korea Spat Threatens to Upend Global Technology ChainThe two neighboring countries are embroiled in a series of disputes, mostly rooted in unresolved rancor over Japan’s 1910-45 colonization of the Korean Peninsula. Hostility grew when South Korea chose last month to end a U.S.-backed military information-sharing agreement with Japan.In August, Japan formally removed South Korea from its so-called white list of most trusted trading partners. This month, South Korea also downgraded Japan from its list of fast-track trading destinations while filing a complaint with the World Trade Organization.Japan controls about 80% of the global market for hydrogen fluoride and South Korea buys almost 90% of the material produced by its neighbor, according to a July 29 report from Hana Financial Investment. The trade partnership has been fruitful for both sides, and before Japan intervened with its raised requirements, producers of hydrogen fluoride were able to ship the material to South Korea without restrictions for three years.Semiconductors form a key source of income for South Korean tech champion Samsung and account for about 20% of the country’s exports.\--With assistance from Michelle Seoh.To contact the reporter on this story: Sam Kim in Seoul at firstname.lastname@example.orgTo contact the editors responsible for this story: Malcolm Scott at email@example.com, Vlad Savov, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.