Nanya: Q4 gross profit margin will continue to grow, strategic partners negotiate to invest in shares to seize production capacity

Li Peiying, general manager of Nanya, said that there are indeed strategic partners negotiating to take shares to ensure production capacity. (File photo)

[Reporter Lin Yiru/Report from Taipei] DRAM major Nanya (2408) held a press conference today (12th). Nanya's general manager Li Peiying said that there is a large gap between supply and demand for AI demand. The DRAM average selling price (ASP) will continue to rise in the fourth quarter, and the gross profit margin will continue to rise. Most of the future increased production capacity will be guaranteed by customer demand. Because the market supply is too tight, some strategic partners also hope to ensure production capacity through equity participation.

In terms of price, Li Peiying pointed out that the average sales price (ASP) in the third quarter increased by about 60% quarter-on-quarter, mainly driven by the expiration of some old long-term contracts in June and the new quarter's contract prices starting from July. Prices are expected to continue to rise in the fourth quarter, but the actual increase remains to be seen. Different product mixes have different increases. The gross profit margin in the fourth quarter is expected to be better than that in the third quarter.

Li Peiying bluntly said that the market is still very out of stock, and AI-related demand is particularly strong, and the gap between supply and demand is also large. As AI applications increase the demand for high-capacity, high-quality and customized memory, extending from HBM and LPDDR5 to network, storage and system management applications, the supply of traditional applications is compressed, and market shortages do not only exist in AI-related products.

Nanya's current AI infrastructure (including servers, networks, storage and system management) accounts for more than 20% of revenue. Li Peiying said that as AI applications continue to expand, the proportion of related revenue will continue to increase from 2027 to 2029.

Talking about the issue of long-term contracts, Li Peiying said that the current Nanya section long-term contract coverage rate is about 50% to 70%, and the contract period ranges from 3 months to 3 years. Recently, many customers hope to extend the original 3-month contract to 3 years or even longer. Negotiations are still ongoing. The increase in production capacity next year will be limited. It is only at the end of next year that new 5A factories are expected to join in and contribute. Most of the increased production capacity in the future will be guaranteed by customer demand. It is true that some customers hope to ensure production capacity through equity participation and strategic partners, and negotiations are still ongoing.

In terms of customized products, Li Peiying said that the development of customized products is progressing smoothly, and small-volume deliveries have begun. Although the shipment volume is not large, client verification is progressing smoothly. The application of customized products covers the cloud and terminal markets, and will be coordinated in accordance with the market development direction and needs of customers.