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South Korean Chipmaker SK Hynix Profit Collapses, Our Views

South Korean Chipmaker SK Hynix Profit Collapses, Our Views

The South Korean chipmaker SK Hynix saw its second-quarter profit down 89% according to an article on CNBC, Reuters. The world`s second-largest memory chip maker behind Samsung Electronics has reported that the April-June profit was 638 billion won ($¥541.9 million), which was actually missing a 828 billion won estimate by Refinitiv SmartEstimate.

Prices of NAND flash memory chips have fallen sharply over the past year as output grew faster than demand and the US-China trade war played havoc with global markets for electronics like smartphones. Prices for DRAM chips, which help devices perform multiple tasks, declined 25% in the second quarter from three months earlier, according to data from tech researcher TrendForce (according to the CNBC piece).

Our Views: The shock waves sent through global and more specifically Asian markets from the US-China trade tensions will only increase in the coming weeks and months. Also, Japanese suppliers are prevented by law from exporting key chemicals to South Korea that are necessary to chip manufacturing, this is the latest salvo in the Tokyo-Seoul trade war that is now escalating. 

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