[GLOBAL ECONOMIC TIMES]  As SK Hynix achieved its highest ever quarterly performance in sales, operating profit, and net profit, expectations for performance bonuses in the second half of this year are rising. It is estimated that in the first half of the year alone, performance bonuses of approximately 4 million won were paid to new employees.

SK Hynix announced on the 24th that it recorded sales of 17.5731 trillion won in the third quarter of this year. This is the highest quarterly performance ever, an increase of 93.8% compared to the same period last year. Operating profit and net profit also achieved the highest quarterly performance ever. During this period, operating profit reached 7.03 trillion won and net profit reached 5.7534 trillion won.

In terms of operating profit and net profit, this is an increase of more than 1 trillion won compared to the third quarter of 2018, which was the semiconductor super boom.

SK Hynix's finance manager (Vice President, CFO) Kim Woo-hyun said in a conference call announcing earnings this morning, "We are delivering profitability for both DRAM and NAND by expanding sales of high value-added products such as HBM (High Bandwidth Memory) and Enterprise SSD (Enterprise Solid State Drive). “While improving from the previous quarter, we recorded performance exceeding the profits achieved during the super boom period in 2018,” he explained.

If this trend continues, a 'performance bonus feast' is expected, and attention is focused on the productivity incentives (PI) paid in the first and second half of the year respectively.

SK Hynix changed its PI payment standards in October last year. The PI payment rate was increased from the original method of determining the payment rate after comprehensively considering the semi-annual management plan, production volume, etc.

According to the new payment standards, when the operating profit margin is over 30%, 150% of the basic salary is paid as PI. If it is less than 15-30%, it is set at 125%. Less than 0 to 15% is 100%, and -10 to 0% is 50%. -Less than 10% will not be paid.

SK Hynix's operating profit margin in the third quarter reached 40%. It recorded 23.2% and 33% in the first and second quarters of this year, respectively.

In the first half of the year, excluding Solidigm, the operating profit margin exceeded 30%. Accordingly, the PI payment rate was set at 150%. If calculated based on the annual salary of new employees last year, it appears that about 4 million won was paid.

As positive market conditions and performance improvement are expected in the second half of the year, the prediction that PI will not be paid at the same level as the first half is gaining weight.

Vice President Kim said, “The memory market is continuing to grow this year as the explosive increase in demand for AI-oriented memory products that started last year continues,” adding, “Although the recovery in demand for PCs and smartphones, which are major applications, is somewhat delayed compared to expectations, server and AI “The strong demand for memory products offset the decline in demand from existing applications, and as the scope of application of AI technology expands, the memory demand base also expands, and we expect the market to grow more stably,” he said.

It was also predicted that shipments of major products are expected to increase in the fourth quarter of this year.

Vice President Kim said, "For DRAM in the fourth quarter, we plan to increase shipments by mid-single digits compared to the previous quarter by expanding sales centered on HBM and server DRAM, which have solid demand." He added, "NAND will focus on expanding sales of enterprise SSD products by 10%. “We are planning to increase shipments in the early % range,” he said.

Increasing the proportion of HBM sales is also considered a factor that will improve performance. HBM's share of total DRAM sales in the third quarter reached 30%. This proportion is expected to increase to 40% in the fourth quarter. Considering the trend of sales expansion centered on high value-added products, profitability is likely to improve rapidly.

Vice President Kim said, "During the third quarter, HBM3E shipments exceeded HBM3, and in the fourth quarter, we plan to begin supplying HBM3E 12-layer products, increasing to more than half of total HBM shipments."

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