On October 12, major DRAM chip manufacturer Nanya Technology held an investor conference and officially released its Q3 2026 financial report. Not only did its revenue and net profit continue to achieve rapid quarter-on-quarter growth, but they also hit record highs. The gross profit margin reached a record high of 85.7%. Nanya Technology General Manager Li Peiying expects that the average DRAM price will continue to rise in Q3, and there is still room for the gross profit margin to increase.
Average DRAM Price Rises 60%, Q3 Net Profit Surges 5474%
In Q3, Nanya Technology's operating revenue reached TWD 133.649 billion, a year-on-year surge of 611.7% and a quarter-on-quarter increase of 61.9%; gross profit reached TWD 114.482 billion, with the gross profit margin rising to 85.7%, an increase of 6.2 percentage points quarter-on-quarter; operating profit was TWD 106.894 billion, with an operating profit margin of 80.0%, an increase of 6.3 percentage points quarter-on-quarter; non-operating income was TWD 2.438 billion; after-tax net profit reached TWD 87.627 billion, a year-on-year surge of 5,474% and a quarter-on-quarter increase of 117.2%; the net profit margin was 65.6%; and earnings per share (EPS) were TWD 25.40.
Cumulating the first three quarters of 2026, Nanya Technology's after-tax net profit reached TWD 163.877 billion, with earnings per share at TWD 49.28. As of September 30, the net value per share was TWD 118.99.
Nanya Technology stated that the Q3 performance growth was mainly driven by the rapid expansion of the DRAM market fueled by AI computing demand, which led to constrained memory supply for smartphones, personal computers, and general consumer devices. The average selling price (ASP) of DRAM in the quarter rose by over 60% quarter-on-quarter. However, due to the continuous rise in DRAM prices, the sales volume in the quarter decreased by a mid-single-digit percentage quarter-on-quarter.
Although Nanya Technology previously focused mainly on the niche DRAM market, it has also been actively exploring the AI market in recent years. Nanya Technology pointed out that currently, the proportion of the company's revenue from AI infrastructure-related applications, including servers, networking, storage, and system management, has exceeded 20%.
Q4 Average Price to Continue Rising
Li Peiying stated that as AI application fields continue to expand, the market demand for higher capacity, higher bandwidth, and customized memory architectures is also increasing simultaneously. AI-driven DRAM demand has expanded from high bandwidth memory (HBM) and LPDDR5 to application fields such as networking, storage, and system management, with the supply-demand gap being particularly evident.
As for the traditional DRAM application market, Li Peiying noted that affected by AI demand crowding out capacity, this market is facing more severe supply shortages and rising average selling prices (ASP). To cope with supply tightening and rising costs, some application-end customers have begun to adopt measures such as downgrading product specifications, reducing memory usage, and extending product life cycles. Some low-end markets have even started using recycled DRAM to control costs and meet demand.
Regarding the DRAM market price trend, Li Peiying pointed out that the over 60% quarter-on-quarter surge in Nanya Technology's Q3 average DRAM selling price was mainly because some old long-term supply agreements (LTA) expired in June this year. These contracts were mostly negotiated in the middle or end of last year when memory prices were relatively low, and Nanya Technology had completed deliveries as agreed by the end of June. After entering July, the company began to apply the new quarter's contract prices, reflecting the substantial increase in market conditions at the time, thereby driving a significant growth in the Q3 average selling price.
Li Peiying pointed out that the inventory level on the supply side remains relatively low at present. Suppliers expect that planning capacity and product mix through LTAs will help improve the stability of future supply and demand. He also revealed that some strategic partners currently hope to secure DRAM capacity through equity investment, but the relevant cooperation still needs to be continuously negotiated by both parties, and there is no further final decision yet.
Looking ahead to Q4, Li Peiying stated that the average DRAM selling price is currently expected to continue rising. Considering that the DRAM market supply remains tight at this stage, the price increase varies across different product mixes, with some products seeing larger increases and others relatively moderate. Under the condition of continuously tight supply and demand, the company expects that there is still room for the Q4 gross profit margin to rise further.
5A New Fab to Start Equipment Installation in Q1 Next Year
To cope with strong customer demand, Nanya Technology previously announced that its capital expenditure for the whole year is expected to exceed TWD 50 billion, and the capital expenditure in 2027 will exceed TWD 200 billion (approximately USD 6.2 billion), which is about four times this year's capital expenditure. These capital expenditures will be mainly used for the construction of Nanya Technology's new 5A wafer fab, as well as R&D investment in new technologies and products.
On August 5 this year, the board of directors of Nanya Technology passed a resolution announcing the construction of a new 5A wafer fab with a maximum investment limit of TWD 346.6 billion (approximately USD 10.734 billion) (which is Nanya Technology's fifth 12-inch wafer fab, located in the Nanlin Science Park, also known as the "Linkou 5A New Fab"). This is not only the largest investment in the history of Nanya Technology but also the largest single investment in Taiwan's DRAM industry in nearly 20 years.
It is introduced that the 5A wafer fab will be implemented in phases over four years, with the goal of increasing the first phase's monthly wafer capacity to 35,900 pieces and introducing extreme ultraviolet (EUV) lithography equipment to serve as a key production base for next-generation DRAM processes. In the future, advanced 10nm-class DRAM processes such as 1B, 1C, 1D, and 1E will be successively introduced. The total capital expenditure budget is capped at TWD 346.6 billion, and the funds will come from internal funds, bank loans, and other financing methods. The fab plans to start wafer production in the second half of 2027, with monthly output reaching 30,000 pieces in 2028 and 35,900 pieces in 2029, gradually moving towards full production.
At this Q3 investor conference, Li Peiying revealed that the new fab is expected to start equipment installation in Q1 2027, with the goal of increasing the monthly wafer starts to 30,000 pieces by the end of 2028, and further expanding to 50,000 pieces per month by the end of 2030.
In addition, regarding the planning of the 3D wafer packaging and testing fab in the Pingtung Science Park, Li Peiying pointed out that 3D IC, through-silicon via (TSV), and wafer bonding will be introduced as the main development directions, and wafer starts are expected to begin in the second half of 2028. At present, the relevant investment will be fully funded by Nanya Technology itself and planned and constructed according to customer needs. In terms of manpower allocation, the Pingtung fab will focus on production and manufacturing, while R&D work will mainly be carried out in the north, with related sites located in the Linkou area of New Taipei City. The Pingtung fab will be equipped with sufficient process engineers and equipment engineers, and Nanya Technology will also carry out talent recruitment and training in advance to meet future production needs.
In terms of DRAM technology layout, Nanya Technology pointed out that the third-generation 10nm-class process (1C) is expected to begin customer validation in Q1 2027, and the simultaneously developed fourth-generation (1D), fifth-generation (1E) processes, and EUV are all continuing to advance as planned. The company will continue to build a diversified product mix, deepen cooperation with customers, and actively layout AI applications through professional manufacturing integration capabilities such as technology development, capacity expansion, and advanced packaging and testing.
Li Peiying emphasized that the company's future expansions will all target AI projects under long-term customer contracts as the main goal.
AI ASIC Memory Project Has Shipped in Small Quantities
Currently, AI-related revenue accounts for over 20% of Nanya Technology's total revenue, and the company expects this proportion to continue rising from 2027 to 2029. In addition to existing DRAM products, Nanya Technology is also actively expanding into AI ASIC-related memory applications.
Li Peiying revealed that the AI ASIC memory project in cooperation with Western customers has begun to ship in small quantities. Subsequently, capacity expansion will be gradually coordinated depending on the customer's product development and market development. The relevant application scope may cover cloud data centers and may also extend to terminal devices, depending on the customer's market layout. Nanya Technology will continue to meet customer needs and invest in the R&D and manufacturing of related DRAM products.
In terms of capital expenditure, Nanya Technology expects that the capital expenditure next year will further increase, mainly because the new 5A fab will enter the equipment installation stage, and the related expenditure will increase significantly. Li Peiying pointed out that Nanya Technology's current net cash level is approximately TWD 270 billion and is still accumulating. It is expected that the capital expenditure required next year can be covered by existing free cash flow without additional borrowing. After completing next year's capital expenditure, the company can still maintain a certain level of net cash position.
Unfazed by the Impact of Capacity Expansion by Mainland DRAM Manufacturers
Regarding the impact of continuous capacity expansion by mainland China DRAM manufacturers, Nanya Technology stated that over the past decade, the capacity expansion by Chinese DRAM manufacturers has not caused a significant impact on the overall industry, and the actual capacity expansion scale of each manufacturer still needs to be observed in the future. At present, major global DRAM manufacturers are actively expanding capacity to cope with the demand growth driven by AI, and most capacity expansion plans are planned based on customers' long-term supply agreements (LTA), which helps to improve the stability of overall supply and demand.
In addition, due to the substantial increase in profits of DRAM manufacturers, many DRAM manufacturers have offered attractive bonuses and benefits to their employees. In response, Li Peiying stated that the company will also determine bonuses based on overall operating performance and efficiency, and indicators such as gross profit margin will also be included in the assessment. He also revealed that, benefiting from the better Q3 performance compared to Q2, the Q3 bonus level is expected to be higher than that of Q2.
Editor: Xinzhi Xun - Langkejian