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Chip costs to recover in 2021 after lockdown stockpiling, says Hynix

Chip costs to recover in 2021 after lockdown stockpiling, says Hynix
Chip costs to recover in 2021 after lockdown stockpiling, says Hynix

As the ongoing COVID-19 pandemic has forced people employees to work form their home, the demand for computing chips has been on a rise. The pandemic has significantly disrupted production and sales across the semiconductor industry, resulting in an increase in the prices of chips.

Apparently, SK Hynix Inc., one of the largest chipmakers in the world, has the answer to when things will go back to normal. The chipmaker has stated that the chip prices would return to the normal state in the fall of 2020 as the demand amidst the pandemic reduces. Alongside this, the industry is poised to recover in the next year.

As per Hynix, the prices of DRAM chips are projected to decline during the second half, with the next year's chip demand increasing as server investments are increased and smartphone shipments get higher.

The South Korean chipmaker also highlighted the tension between the US and China and its outlook on the whole market. However, it stated that the demand for chips in 5G smartphones and gaming consoles would improve once the market re-opens.

The company expects to marginally increase capital spending in 2021 compared to this year. In light of the recent backlash toward Huawei, Hynix also wants to handle supplies flexibly.

CFO Cha Jin-Seok commented that the market remained welcoming in the first half of the year due to growing anxiety about the IT supply chain. And for the second quarter, the organization achieved better than expected operating profit.

Hynix's operating profit tripled from the previous year to USD 1.59 billion, while its revenues rose 33 percent to 8.6 trillion. The company’s rival Samsung Electronics has also recorded a 23% increase in Q2 operating profit, while American chipmaker Micron Technology stated current-quarter revenue would beat estimates.

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Sunil Jha

Sunil Jha has been a part of the content industry for close to two years. Having previously worked as a voice over artist and sportswriter, he now focuses on writing articles for, across a slew of topics, ranging from technology to trade and finance. With a business-oriented educational background, Sunil brings forth the expertise of deep-dive research and a strategic approach in his write ups.