Seoul, May 4, 2005
hynix Semiconductor Inc. (‘hynix’ or ‘the Company’, www.hynix.com) today announced the earnings results for its first quarter of 2005, ended March 31, 2005.
The Company recorded the consolidated revenue of 1,270 billion won and operating profit of 321 billion won which are down by 12% and 30% respectively from the previous quarter’s revenue of 1,450 billion won and operating profit of 459 billion won. The company also recorded net income of 321 billion won for the first quarter which is a 53% increase from the previous quarter’s 209 billion won.
The sequential decrease in the revenue and operating profit was mainly due to a strong price decline in DRAM market that could not be completely offset by increased bit growth and reduced unit cost. In addition, weak US dollar against Korean won had a negative impact on the overall revenues and profits.
Contrary to reduced DRAM sales, hynix’s flash sales has increased significantly, mainly attributable to the Company’s flexible use of its capacity and more favorable NAND Flash market condition than DRAM during the quarter. In parent basis, revenue for the first quarter was 1,284 billion won, operating profit was 299 billion won, which is a sequential decline of 4% and 29% respectively, while net income was 317 billion won, which is an increase of 70% sequentially.
In April 2005, hynix has reached a settlement with the United States Department of Justice (“DOJ”), which ended the DOJ’s investigation of hynix as part of the industry-wide investigation of pricing for Dynamic Random Access Memory (“DRAM”) products. hynix has agreed to plead guilty to one count of limited violation of the U.S. antitrust laws and to pay a fine of $185 million, which is payable with no interest bearing installments over the next 5 years. The settlement of the investigation was a decision to help the Company manage with better transparency by getting rid of a going concern.
The reserve which hynix took in its 2004 financial statements in connection with this DRAM pricing investigation is more than adequate to cover the fine. Also in April 2004, hynix officially announced the establishment of its joint venture in China with STMicro electronics. hynix ST Semiconductor Ltd., which is the name for the joint venture, will be owned 67% by hynix and 33% by STMicro. hynix ST Semiconductor will have one 8-inch fab and one 12-inch fab for manufacturing of DRAM and NAND flash memory with the initial investment of $2 billion dollars. Currently, 8-inch wafer line is scheduled to begin production in the first half of 2006 and 12-inch wafer line to begin production in the second half of 2006. For hynix, this joint venture will be a firm base for its long-term competitiveness as the Company will be able to secure 12-inch manufacturing facilities with a minimum investment, utilize a cost-effective manufacturing environment, maintain its leading position in the fast-growing Chinese market, and fundamentally resolve existing and potential trade issues.
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Please note that the financial results discussed herein are preliminary and speak only as of March 31, 2005. 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 Korean Securities and Exchange Commission. 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.
