Siena:Nanya Technology Corp. is forecasting an increase in dynamic random access memory (DRAM) prices and gross margins for the fourth quarter. This expectation comes as the memory market continues to face a significant supply shortage, according to company President Lee Pei-ing.
According to Focus Taiwan, During an online investor conference, Lee noted the tight supply of DRAM and indicated that price increases would vary by product, contributing to improved gross margins. In the third quarter, Nanya Technology, Taiwan's leading DRAM manufacturer and part of the Formosa Plastics Group, reported revenue of NT$133.649 billion (US$4.19 billion), marking a 61.9 percent increase from the previous quarter. This rise was driven by an over 60 percent quarter-on-quarter increase in average selling prices, despite a 4 to 6 percent decrease in shipments.
The company's gross margin increased by 6.2 percentage points to 85.7 percent, while net profit reached NT$87.627 billion, or NT$25.4 per share. For the first nine months of the year, net profit amounted to NT$163.877 billion, or NT$49.28 per share. The profitability improvement in the third quarter was largely attributed to higher contract prices effective from July.
Lee highlighted that the demand for high-capacity, high-bandwidth, and customized memory is being driven by expanding artificial intelligence (AI) applications. The demand has extended beyond high-bandwidth memory (HBM) to include AI infrastructure applications such as networking, storage, and system management, amid ongoing supply constraints in conventional DRAM markets.
AI infrastructure-related products, including servers, networking, storage, and system management, now contribute over 20 percent to Nanya Technology's revenue, with expectations for this share to increase. DDR5 products account for about 10 percent of revenue, although the company does not plan to significantly raise this share soon due to strong demand for DDR4.
Regarding capacity expansion, Lee stated that the installation of equipment at the company's new 5A fab is scheduled to start in the first quarter of 2027, with the facility expected to reach a capacity of 30,000 wafers per 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 anticipated to begin in 2027, while development of its fourth-generation (1D) and fifth-generation (1E) processes, along with extreme ultraviolet (EUV) lithography, remains on track.
Current long-term contracts cover 50 to 70 percent of the company's sales, with many customers looking to extend agreements to three years or longer, and some expressing interest in equity stakes to secure production capacity. Negotiations are ongoing. Lee also mentioned that capital expenditure is expected to increase next year as the new fab approaches equipment installation, with the company holding net cash of about NT$270 billion to support this spending.