Market Insight

Hynix Barely Ekes Out a Profit on Falling Q4 Revenues


Hynix saw its operating income drop 60% during Q4 as revenues dropped to $2.43 billion (from $2.78 billion in Q3). The primary driver behind the falling revenues and margins was the deteriorating pricing environment. Both DRAM and NAND ASPs fell for the quarter (28% and 12% respectively). While Hynix’s ASPs for the quarter fared better than Nanya’s (which dropped 35% during Q4) they did not hold up as well as Micron’s, which dipped just 11% for the quarter – indicating that Hynix remained heavily exposed to the commodity DRAM market in Q4.

Hynix’s cash balance decreased during the quarter to a little under $2 billion (Micron’s cash balance at the end of November was $2.4 billion). This is still a reasonably healthy level and should provide ample cushioning to all but the most severe market swings in 2011. However, with just $2 billion of cash in the bank Hynix will unlikely launch any major capacity expansions in 2011. It will certainly continue its process conversions (in DRAM this means moving to the 4xnm node in 1H 2011 and the 3xnm node by the end of the year), but the possibility of expanding its manufacturing base is slim. Process conversion should be enough to keep Hynix in the game for 2011.