Hynix reaps gain from higher DRAM prices

The rising price of computer memory may not be welcomed by consumers, but for South Korea's Hynix Semiconductor Inc., one of the largest memory chip makers in the world, the higher prices have brought with them something not seen for more than a year: profitability.

In the first quarter of this year Hynix reported a parent (unconsolidated) net income of 3 billion won (US$2.3 million) on revenue of 823 billion won.

A year earlier, Hynix saw parent net losses of 540 billion won for the quarter on sales of 1.8 trillion won, according to Daniel Behrendt, an investor relations spokesman for Hynix. Figures for the two years are not directly comparable because Hynix spun off several divisions, including its telecommunication and TFT LCD (thin film transistor liquid crystal display) operations, during 2001.

Prices for SDRAM (synchronous dynamic RAM) and DDR DRAM (double data rate DRAM) began rising on the spot market in the final quarter of last year and led Hynix and fellow Korean memory maker Samsung Electronics Co. Ltd. to raise prices for their major customers during the first quarter, say analysts. A 256M-byte stick of DDR DRAM is currently selling for around US$77 in Asia, compared to around $20 six months ago, according to market analysts ICIS-LOR.

The profit was welcome news for the Seoul company, which is mired in debts and currently awaiting the result of discussions between creditors and Micron Technology Inc. over a possible alliance or acquisition. Those talks began in December last year and have turned into something of a soap opera. Hardly a week goes by without local media reporting that a deal with Micron or one of a handful of other memory makers is close, but to date nothing has been announced.

"Talks are currently continuing with Micron," Behrendt said. "The goal is to have something worked out within the next two weeks."

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