SK Hynix is one of the key movers and shakers in the world′s highly lucrative memory chip industry. But a decade ago it was a very different story with the company teetering on the edge of bankruptcy,... with little hope of survival. For this week′s Industry Insight... our Hwang Ji-hye tells us about one of the most remarkable turnarounds in Korea′s business history. For three straight quarters this year,... SK Hynix reported over one-trillion won, or roughly 900-million U.S. dollars in operating profit. In the third quarter, it earned 30 dollars for every 100 dollars of sales, meaning it was more profitable than Apple in terms of operating profit margin. So what′s driving the company′s robust growth recently? Take a look... The memory chip industry is all about adding a ton of a memory storage onto a tiny semiconductor... that includes DRAM chips for computers and flash chips used in smartphones and digital cameras. So the name of the game is miniaturization technology and an efficient manufacturing process. And SK Hynix the world′s second-largest chipmaker excels in reducing production costs. "Basically DRAM is a kind of commodity. So just to be a low cost producer is the most important thing. Basically during the last 30 years or so SK Hynix remained as a low-cost producer." Industry experts say the company′s survival instinct has led to engineering innovations that pushed production costs down. "When SK Hynix was going through hard times in the past, it wasn′t able to invest in facilities so it had to operate its factories with very little money. But it was back then when the company accumulated its know-hows. So, in terms of production efficiency, it has become the number one." Established in 1983 as Hyundai Electronics, the company was pushed to the brink of collapse both in the wake of the 1997 Asian financial crisis and in the 2008 global financial crisis. The debt-laden company also suffered from years of a cut-throat game of slashing prices played out by more than 20 memory chipmakers. In 2001, its creditors forced it into a debt workout program. The seemingly never-ending story of financial trouble ended when SK Group, one of Korea′s three largest conglomerates, took it over in 2012 and renamed it SK Hynix. With the help of its new deep-pocketed parent, the company could aggressively invest in the latest production facilities as well as research, while the rest of the industry players were cutting back. Now the business environment for SK Hynix seems positive... with Samsung Electronics and Micron Technology of the U.S. remaining as the company′s only rivals. The demand for memory chips is also growing thanks to the ever-evolving smartphone. Of course, a peaceful cohabitation by the three powers could end if the industry leader Samsung aggressively increases its market share... or if newcomers decide to enter the market. For the foreseeable future, however, SK Hynix is poised to e

• published: 29 Dec 2014
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