S&P lowers Hynix to stable

S&P said it revised the outlook on SK Hynix Inc. to stable from positive.

The agency also said it affirmed the company’s BB+ long-term corporate credit rating.

The outlook revision reflects an expectation that challenging memory semiconductor market conditions will put some pressure on the company’s operating performance and cash flow over the next 12 months., S&P said.

The global memory industry has been in a down-cycle starting from late 2015, as evidenced by recently weakening operating performance, the agency explained.

This down-cycle is primarily attributable to weaker-than-expected chip demand from PCs and smartphones because of a weak global economy and market saturation, S&P said.

Continued intense competition, particularly in the NAND flash memory market, also has resulted in higher-than-expected drops in selling prices, the agency added.

The industry will continue to demonstrate high cyclicality because of capital and technology intensity, the volatility should moderate somewhat after years of industry consolidation, S&P said.

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