SK HYNIX & LG DISPLAY’S EARNINGS PLUNGE

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SK Hynix has released its business results for the third quarter of the year, shocking investors with a 60 percent plunge in operating profit year on year. LG Display also posted a deficit of over 700 billion won in the third quarter alone. This is due to a demand cliff, which has resulted from a waning business boom as well as surging interest rates and inflation. There is analysis that the nation's industries of chip making, displays and home appliances are caught in a complicated crisis.

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Few shoppers are seen at a home appliances store, as they are reluctant to open up their wallets and spend money due to soaring prices.

[Soundbite] Kim Jong-eun(Busan Resident) : "Since they are expensive, it seems people think hard before deciding to make a purchase and wait to the point when their appliances are no longer working."

In the third quarter, 51.39 million TV sets were shipped worldwide, down 2.1 percent from the same period last year. The shipment of smartphones also dropped nine percent year-on-year to an eight-year low. This has inevitably led to a fall in sales of chips and displays. SK Hynix announced that in the third quarter, its operating profit plummeted 60 percent, compared to the same period last year.

[Soundbite] Noh Jong-won(SK Hynix) : "Amid the deepening slowdown in demand for PCs and smartphones, our customers slashed purchases with a priority placed on reducing inventories."

The poor performance was also partly due to a ten percent drop in memory chip prices amid a decline in demand. LG Display also recorded an operating deficit of over 700 billion won in the third quarter alone, posting a business loss for two quarters in a row. There are expectations that the tech industries could start recovering in the second half of next year when their inventories are predicted to decrease. However, some industry analysts say the current demand cliff could prolong further.

[Soundbite] Kim Dong-won(KB Securities) : "There is a chance that the demand could recover later than expected, given geopolitical uncertainties like the Ukrainian crisis."

In response to the industry recession, SK Hynix plans to reduce its investment by 50 percent and cut back on the production of unprofitable products next year. Having already adjusted operations of some production lines, LG Display will end the production of ordinary LCD panels at domestic factories earlier than scheduled. It will also reorganize its business structure to focus on the OLED display sector.