SK Hynix will cut its capital expenditure by 40% in 2019. Why? Oversupply!!

Saturday, January 26, 2019

SK Hynix said at the financial meeting that in response to the increase in global economic uncertainty and the depression of the semiconductor industry in the face of cyclical recession, the overall capital expenditure will decrease by 40% in 2019. According to sk hynix's capital expenditure of 17 trillion won in 2018, it is estimated that the capital expenditure in 2019 will be only slightly higher than 10 trillion won.

SK Hynxi further pointed out that although its capital expenditure will be drastically reduced in 2019 in response to changes in the overall environment and environmental demand in the semiconductor market, it is possible to further reduce its capital expenditure figures in the future. However, there will be no further restrictions on forward-looking and innovative investment. For example, investments in R&D and M16 plant construction.

 

Although in the fourth quarter of 2018, SK hynix's operating profit fell by 30% from the previous quarter. However, due to the high memory prices in the first half of the year, revenue reached 40.44 trillion won in 2018 and business interests reached 20.084 trillion won, a record high. However, Hynix points out that memory demand has slowed down since the second half of 2018, and memory market prices have begun to fall sharply as supply shortages have been resolved.

 

SK Hynix predicts that the overall memory shortage will continue until the first half of 2019. Due to the impact of external economic environment on the demand of memory market, trade friction between China and the United States has not slowed down. Server customers in information-related industries have adjusted their inventory. Therefore, SK Hynix plans to reduce capital expenditure, then focus on technology development projects, through the transformation of production technology, SK Hynix can further get out of the downturn of the industrial cycle, and cope with the recovery and development of future industries.

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