Investing.com -- South Korean chipmaker SK Hynix Inc (KS:000660) posted an operating loss for the second quarter on Wednesday, but said that some sectors of chip demand were beginning to pick up amid increased interest in artificial intelligence development.
The firm logged an operating loss of 2.9 trillion won ($1 = 1,274.54 won) in the April-June quarter, compared to a 4.2T won profit for the same period a year ago, with chip prices remaining weak amid low demand.
The loss was slightly bigger than a Reuters estimate of 2.7T won, but narrowed from the 3.4T won-loss reported in the Jan-March quarter.
SK Hynix cited some improvement in sales of premium High Bandwidth Memory and high-speed RAM products through the quarter, largely due to increasing demand for server memory for developing AI.
Both products are integral to AI development, given the large amounts of data that needs to be processed quickly by AI models.
“Amid an expansion in (the) generative artificial intelligence market, which has largely been centered on ChatGPT, demand for AI server memory has increased rapidly,” the firm said in a statement.
But this was insufficient in offsetting a broader decline in revenue from laggard personal computing and smartphone demand, which pulled chip prices lower.
Quarterly revenue fell 47% to 7.31T won, but rose 44% from the prior quarter.
SK Hynix and most of its chipmaking peers, have been struggling with a slowdown in chip demand over the past year, amid deteriorating global economic conditions and a supply glut in the chipmaking space.
SK Hynix peer Samsung Electronics Co Ltd (KS:005930), the world’s largest memory chipmaker, had flagged a sharp decline in its second-quarter earnings earlier in July, citing weak chip prices and growing customer inventories.
Taiwan Semiconductor Manufacturing Co (TW:2330) (NYSE:TSM), or TSMC, the world’s largest contract chipmaker, also reported a weaker profit for the second quarter, and said that while AI development was supporting some aspects of chip demand, it would be insufficient to offset a broader decline in the industry.
TSMC’s comments somewhat contrasted those of its major customer, Nvidia Corporation (NASDAQ:NVDA), which expects AI demand to drive a chipmaking boom this year.