Recession Alarm? Apple Supplier SK Hynix’s Outlook Sours as Tech Demand Wanes
South Korean chipmaker SK Hynix Inc. warned of waning memory growth and rising inventories, becoming the latest tech giant to sound the alarm over global economic uncertainty.
The downbeat sentiment came after the Apple Inc. supplier logged a 56% jump in second-quarter profit on resilient demand and a weak Korean won on Wednesday. But executives said they see a slowdown in demand from its main growth engines of PCs, smartphones and servers.
Recession concerns are prompting businesses to tighten costs, Chief Marketing Officer Kevin Noh said at a post-earnings news conference, adding that chip shipment growth forecasts for the current quarter have to be revised down.
“Market growth for the year is going to be a lot lower than our expectations earlier in the year,” Noh said. With inventories likely to trend above average throughout the market, “it is inevitable that the capex for next year has to be adjusted significantly.”
The company said it will decide on its 2023 capex plan as early as late-August -- ahead of its usual schedule. Hynix is considering slashing its 2023 capital expenditure by about 25%, joining US rival Micron Technology Inc. in cutting investment on fab expansions, Bloomberg News reported this month.
Over the longer term, however, SK Group Chairman Chey Tae-won promised in a call with President Joe Biden that the group would invest $15 billion to build an advanced packaging and testing facility and support research programs in the US. The US is debating a bipartisan bill to bolster its semiconductor industry and fight Chinese competition by reducing its reliance on Asia.
Shares in Hynix fell as much as 1.3% after the news, while the benchmark Kospi index was little changed.
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