The memory is too good and the factory expansion is too fast! Winbond Electric Co., Ltd. Youjun: The biggest fear is that the recession will come too late

[Reporter Lin Yiru/Yunlin Report] Benefiting from the rising demand for AI, the memory market is in short supply, and manufacturers are actively expanding production. However, memory factory Winbond (2344) chairman Jiao Youjun said frankly today (7th) that the boom has been too good for too long. Companies may not know when to stop expanding production and continue to build factories and increase production capacity. Only when the economy reverses will they find that there is too much production capacity. "Our worry is that the next recession will come too late."

Jiao Youjun said that he predicted two years ago that this rising economic cycle would last about two years, starting in July 2025 and expected to end in June 2027. Now the market prosperity seems to be extending to 2028 and 2029. He believes that the business cycle still has its own rules, and industry players should not continue to expand production just because the business cycle is good, while ignoring the changes in supply and demand that may be brought about by the next wave of cycles.

Jiao Youjun pointed out that in the past six months to one year, the source of funds has continued to be regarded as an important indicator to judge the economic cycle, because the overall economy must ultimately return to the adequacy of funds. "If there is no money, all investment will definitely slow down." He predicts that by 2029, funding constraints may become the reason why the industrial boom will enter the next downward cycle.

However, Jiao Youjun also believes that the demand for AI data center construction is still relatively clear in the short term. The land development permit, power and factory buildings required for the data center in 2027 have been prepared. Next, the server installation stage will enter, and relevant funds have also been invested in advance. Therefore, in 2027 Basically, it will not be affected by funding or government development licensing policies, and it will not have much impact in 2028. As for whether there will be enough land, power and factories in 2029 to allow cloud service providers (CSP) operators to maintain the current investment scale, it remains to be understood from customers.

Talking about the current memory market and terminal demand, Jiao Youjun said bluntly, "Every industry is in recession now, and (AI) is the only one." Mobile phone sales this year may be much less than in previous years, and sales of PCs and various electronic products are also not as good as in the past. This is mainly due to rising product prices, and consumers may choose to postpone replacement. The AI ​​industry is more receptive to price increases, but ordinary consumers have limited affordability. "We cannot say that those who work on AI eat all the food, so everyone else does not eat. This does not work." He believes that from a social responsibility perspective, he does not want memory prices to continue to rise because price increases have already caused harm to ordinary consumers.

As for the current gross profit margin of memory factories, which is easily 70% or 80%, Jiao Youjun said that he does not believe that gross profit margin can continue to rise. Price increases still have their limits, and original manufacturers will also worry about excessive price increases that suppress terminal demand.

Talking about the booming industry and Winbond's future operational layout, Jiao Youjun said, "Losing money is annoying, making money is tiring." He explained that when you are losing money, you must try to turn a loss into a profit, but you cannot relax when you are making money, because when everyone is making profits, they will start to rush forward, grab talents, expand factories and equipment, and continue to create technology. You cannot feel comfortable just because you make money this year, otherwise you may face a crisis in three years.