Nanya Technology expects DRAM prices, margins to rise in Q4

Taipei, Oct. 12 (CNA) Nanya Technology Corp. expects dynamic random access memory (DRAM) prices and gross margins to keep rising in the fourth quarter as the memory market remains severely undersupplied, company President Lee Pei-ing (李培瑛) said Monday.

"DRAM is still in very tight supply," Lee told an online investor conference. He said that prices were expected to rise further in the fourth quarter, with increases varying by product, supporting continued improvement in gross margins.

Nanya Technology, Taiwan's only major homegrown DRAM maker and a key affiliate of the Formosa Plastics Group, reported third-quarter (Q3) revenue of NT$133.649 billion (US$4.19 billion), up 61.9 percent from the previous quarter, as average DRAM selling prices climbed more than 60 percent quarter-on-quarter.

Although Q3 shipments fell 4 to 6 percent from the second quarter after inventories were largely depleted, gross margin rose 6.2 percentage points to 85.7 percent, the company said.

Net profit was NT$87.627 billion, or NT$25.4 per share. For the first nine months of the year, net profit totaled NT$163.877 billion, or NT$49.28 per share, company data showed.

Lee said the sharp improvement in third-quarter profitability was mainly due to higher contract prices that took effect in July, after previous long-term agreements expired at the end of June.

Expanding artificial intelligence (AI) applications are driving demand for higher-capacity, higher-bandwidth and customized memory, he said.

Demand has also spread beyond high-bandwidth memory (HBM) to AI infrastructure applications such as networking, storage and system management, while supply remains tight in conventional DRAM markets, Lee said.

AI infrastructure-related products, including servers, networking, storage and system management, now account for more than 20 percent of Nanya Technology's revenue, a share that is expected to keep rising, Lee said.

DDR5 products account for about 10 percent of revenue, Lee said, adding that the company has no plans to significantly raise that share in the near term because demand for DDR4 remains strong.

On capacity expansion, Lee said equipment installation at the company's new 5A fab is scheduled to begin in the first quarter of 2027. The facility is expected to reach capacity of 30,000 wafers a month by the end of 2028 and 50,000 by the end of 2030.

Customer validation of Nanya Technology's third-generation 10-nanometer-class (1C) process is expected to begin in the first quarter of 2027, while development of its fourth-generation (1D) and fifth-generation (1E) processes, as well as extreme ultraviolet (EUV) lithography, remains on schedule, Lee said.

Long-term contracts currently cover about 50 to 70 percent of the company's sales, Lee said. Many customers are seeking to extend three-month agreements to three years or longer, and some have expressed interest in taking equity stakes in Nanya Technology to secure production capacity. Negotiations are ongoing, he said.

Lee also said capital expenditure will increase next year as the new fab moves toward equipment installation. The company has net cash of about NT$270 billion, which he said should be enough to fund next year's spending.