Seoul, July 27, 2007
hynix Semiconductor Inc. (‘hynix’, ‘the Company’, www.hynix.com) today announced the earnings results for its second quarter 2007, ended June 30, 2007. The Company recorded the consolidated (which is the consolidation of the Company and its overseas subsidiaries) revenues of 1.87 trillion won which is a 24% decrease compared to previous quarter’s 2.45 trillion won, but an increase by 12% from 1.67 trillion won in the same period last year.
Sequential deterioration in sales was mainly due to the sharp erosion in DRAM price which was caused by aggressive production growth in the industry. Although demand has also grown with price elasticity, the market experienced continued oversupply situation in the second quarter. On the other hand, NAND flash price increased primarily due to the constrained supply growth which has resulted from the capacity shift to DRAM and technology migration issues. Under such market circumstances, hynix’s DRAM ASP dropped by 43% which has been partially offset with 21% of bit growth that has been achieved through 12” capacity expansion and 80nm technology migration. Meanwhile, NAND flash ASP rose by 25% sequentially with slightly negative growth in bits. The cause of negative bit growth was largely due to capacity shift to DRAM despite the company’s efforts to drive growth with 60nm technology migration.
Operating profits recorded 109 billion won, down by 76% quarter-on-quarter with 6% of operating margin, and a decrease by 72% from 387 billion won a year earlier. Despite the company’s cost reduction efforts, severe price erosion of DRAM product had bigger negative impact on the operating profits. Adding the depreciation and amortization expenses to the operating profits, EBITDA came in at 680 billion won with EBITDA margin of 36%.
Net profits for the second quarter recorded 225 billion won with 12% of net profit margin, sustaining 16 consecutive quarters of profits since the third quarter of 2003. The difference between the operating profits and the net profits was primarily due to the gain on foreign currency translation and other items such as reversal of provision for some of litigations.
Meanwhile, consolidated cash and short-term financial instruments decreased by 271 billion won sequentially to 1.79 trillion won, and the interest-bearing debts increased by 622 billion won to 4.19 trillion won at the end of the second quarter. As a result, debt to equity ratio went up to 44% and net debt to equity ratio went up to 25%.The increased level of debts is temporary which will be soon reduced down again once the proceeds from the refinancing transaction is used to pay down the existing debts in the third quarter.
Capital spending, including China JV, during the first half of the year represented approximately 70% of the planned capital spending of 4.4 trillion won for 2007. With the capex, the company has not only increased 12” wafer capacity, but also increased 80nm DRAM production and 60nm NAND flash production.
Please note that the financial results discussed herein are preliminary and speak only as of June 30, 2007. Readers should not assume that this information remains operative at a later time. In addition, this information may include forward-looking statements that involve a variety of risks and uncertainties that could cause actual results to differ materially. For further discussion of these risks and uncertainties, readers should refer to hynix Semiconductor Inc.’s filings with the Korea Exchange. This document is neither an offer to sell nor a solicitation of an offer to sell any security of hynix. hynix securities may not be sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended.
About hynix Semiconductor Inc.
hynix Semiconductor Inc. (HSI) of Icheon, Korea, is the world’s top tier memory semiconductor supplier offering Dynamic Random Access Memory chips (“DRAMs”) and Flash memory chips for a wide range of distinguished customers globally. The Company’s shares are traded on the Korea Stock Exchange, and the Global Depository shares are listed on the Luxemburg Stock Exchange. Further information about hynix is available at www.hynix.com.
