SK Hynix margins slip in 3Q despite seventh straight profit quarter

South Korea's second-largest chipmaker attributed expanded sales to the portion of microprocessors applicable to mobile IT devices, and to a favourable exchange rate environment.

SK Hynix posted over 1 trillion won in operating profits on expanded sales in the third quarter on Thursday -- its seventh continuous quarter of profits.

The South Korean semiconductor company also reported a slip of net profit margins, down 4 percent to 21 percent from the company's net profit margin of 25 percent in the third quarter of 2014.

Hynix posted 4.925 trillion won ($4.104 billion) in revenue in the third quarter year-on-year, an increase of 14 percent from the third quarter 2014; and 1.383 trillion won ($1.152 billion) in operating profits, up 6 percent from the third quarter the previous year.

Over the previous quarter, DRAM and NAND Flash shipment, based on bit, increased 11 and 15 percent respectively, but their average selling price also slipped 11 and 15 percent, which led to weakening net profit margins, according to the company.

The output of DRAM chips outpaced demand, which led to a drop in SK's average selling price by 11 percent on-quarter, weighing down performance. DRAM is SK Hynix's flagship memory chip and accounts for about 75 percent of total revenue. SK has become Apple's largest supplier of chips in premium smartphones.

"SK Hynix is planning to meet steadily rising demand of mobile DRAM and expand the proportion of DDR4 and LPDDR4 continuously," SK said in a statement. "For NAND Flash, the company will constantly enhance its cost competitiveness of 1Xnm TLC.

"Plus, it will complete the development of 48-layer 3D NAND Flash within this year, while expanding NAND solutions including SSD to gear up for upcoming market demand of the 3D NAND next year."

Compatriot Samsung is also betting hard on 3D NAND, being the first to commercialise and supply them last year as a result of the demand for mobiles and servers.