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SEOUL: South Korea’s SK Hynix Inc said market conditions will improve from the second half of 2023 on production cuts by memory chip makers after reporting a record quarterly operating loss on Wednesday.

SK Hynix said its losses widened as the slowdown in the global economy in the first quarter exacerbated a glut of memory chips, weakening demand and lower prices.

However, SK Hynix said, “We expect earnings to recover in the second quarter after bottoming out in the first quarter as sales volumes are gradually increasing.”

Earlier this month, South Korea’s Samsung Electronics Co Ltd, the world’s largest memory chip maker, announced a rare production cut as prices plummeted due to a sharp drop in global semiconductor demand.

SK Hynix said such cuts would reduce inventories across the industry, improving market conditions from the current quarter.

The world’s second-largest memory chip maker reported an operating loss of KRW 3.4 trillion ($2.54 billion) in the January-March quarter.

This result was in line with Refinitiv SmartEstimate’s KRW 3.4 trillion operating loss, weighted by consistently accurate analysts based on the forecasts of 29 analysts.

It is the biggest loss since SK Group acquired Hynix in 2012, and it is the second consecutive loss following the loss of 1.9 trillion won in the fourth quarter.

Revenue was 5.1 trillion won, down 58% year-on-year.

SK Hynix shares rose 2.1% against a 0.2% drop in the broader market after the company showed a market rally.

($1 = 1,338.6600 won) SK Hynix sees memory chips recover in second half after record loss

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