South Korean chip supplier SK Hynix said Friday that fourth-quarter operating profit plunged 95 percent, below analysts’ expectations, as oversupply and weak demand hit chip prices. SK Hynix is the world’s second-largest memory chip maker after Samsung Electronics, according to Refinitiv.
The company said fourth-quarter operating profit was 236 billion won ($202.2 million), below the average estimate of 433 billion won from 19 analysts.
That compares with a 4.4 trillion won operating profit in the same period last year. The company also posted a net loss of 118 billion won in the fourth quarter.
“DespiteSK Hynix’s positive view of the improvement in demand in the near term, the company will implement a more prudent production and investment strategy as complexity and uncertainty remain much higher than in the past,” the company said in a statement.
After adding capacity during the 2017 boom, the chip industry as a whole has been hit by overcapacity as customers for smartphones and data centers are meeting lower demands.
Samsung Electronics on Thursday reported its lowest annual profit in four years and gave cautious expectations of rising demand for chips.