Hynix manages to post its first profit in over a year

MEMORY MAKER Hynix announced its first profitable quarter in a year as cost cutting led to a $1.8m profit.

Hynix is the second largest DRAM manufacturer behind Samsung but it has not been able to translate its market position into profits recently. However the firm announced a six percent increase in revenue to $2.84bn and a large turnaround to post a $1.8m profit.

While Hynix's profits were nothing to write home about, the fact that the firm was able to post its first profit in a year might be taken as a good sign for DRAM industry, though Hynix tempered such thoughts by stating that its DRAM shipments fell by five percent. That Hynix posted a steep increase in gross and operating margins will give some hope to other memory makers that costs can be cut and prices are increasing.

Hynix is facing stiff competition to retain its second position in the DRAM market with Micron trying to make a deal to buy bankrupt Japanese DRAM maker Elpida. Should Micron manage to convince Elpida's shareholders to sign off on the deal, that will take the combined firm ahead of Hynix in the DRAM market and some analysts believe put it in a better position to compete with market share leader Samsung.

Hynix forecast that the fourth quarter will see PC sales go up but said it expects demand for low-end smartphones, effectively mobile DRAM and NAND chips, will be the main driving force behind sales. Hynix is not the first semiconductor firm to lose faith in Microsoft's ability to push PC sales, with Intel also having to cut forecasts before releasing its third quarter financials earlier this month. µ