This article first appeared on GuruFocus. Net Sales: Q3 2026 net sales of TWD113.6 billion, up 61.9% QoQ from TWD82.5 billion and up 611.7% YoY. Gross Profit: Q3 2026 gross profit of TWD114.4 billion, up 74.5% QoQ from TWD65.6 billion. Gross Margin: Q3 2026 gross margin of 85.7%, an improvement of TWD48.9 billion QoQ due
Net Sales: Q3 2026 net sales of TWD113.6 billion, up 61.9% QoQ from TWD82.5 billion and up 611.7% YoY.
Gross Profit: Q3 2026 gross profit of TWD114.4 billion, up 74.5% QoQ from TWD65.6 billion.
Gross Margin: Q3 2026 gross margin of 85.7%, an improvement of TWD48.9 billion QoQ due to higher ASP.
Operating Income: Q3 2026 operating income of TWD106.8 billion, up 75.7% QoQ from TWD60.8 billion; operating margin increased 6.3%.
EVENTS: Q3 2026 EBITDA of TWD110 billion.
Non-Operating Income: Q3 2026 non-operating income of TWD2.4 billion.
Income Tax: Q3 2026 income tax of approximately TWD21.7 billion, up TWD9.6 billion QoQ.
Net Income: Q3 2026 net income of TWD87.6 billion, up 74.6% QoQ from TWD50.1 billion; net margin of 65.6%.
EPS: Q3 2026 EPS of TWD25.40, compared to Q2 2026 EPS of TWD14.66; 9-month accumulated EPS of TWD49.28.
Book Value: Q3 2026 book value of TWD118.99 per share, up from TWD93.45 per share in Q2 2026.
ASP: Increased more than 60% QoQ and more than 500% YoY, primarily reflecting renewed long-term agreements.
Bit Shipment: Decreased by mid-single-digit QoQ due to inventory depletion; expected to stay flat until new fab output in second half of 2027.
Operating Expenses: Q3 2026 operating expenses of TWD7.588 billion versus Q2 2026 TWD4.793 billion; R&D up TWD1.9 billion and SG&A up TWD0.9 billion, mainly due to concurrent and future employee compensation.
SG&A Expense: Q3 2026 SG&A expense of TWD2.443 billion versus Q2 2026 TWD1.5 billion.
Cash Flow: Q3 2026 cash from operating activities of TWD96 billion; free cash flow of TWD75.2 billion; capital expenditure of TWD20.7 billion; financial activity of TWD4.3 billion.
Cash Balance: Q3 2026 ending cash balance of TWD288.5 billion versus beginning balance of TWD217.6 billion; dividend payout of TWD4.6 billion.
Net Cash: Q3 2026 net cash of TWD270 billion, an improvement of approximately TWD70 billion from Q2 2026 net cash of TWD199.2 billion.
CapEx: Full-year 2026 CapEx targeted at TWD69.7 billion; Q1Q3 2026 CapEx of TWD27.6 billion; wafer CapEx accounts for around 50%; new fab CapEx of TWD346 billion.
AI/Server Revenue: AI infrastructure and server contribute more than 20% of Nanya’s revenue.
New Fab Expansion: New fab equipment move-in scheduled for Q1 2027; plan to ramp up to 30,000 wafers by end of 2028 and target up to 50,000 by end of 2030.
Technology Roadmap: 1C customer sampling targeted for Q1 2027; 1D fourth and fifth generation process technology and EUV development on track.
Nanya Technology Corp (TPE:2408) reported Q3 2026 revenue of TWD113.6 billion, up 61.9% QoQ and 611.7% YoY, driven by a greater than 60% QoQ increase in ASP.
Gross margin reached 85.7% in Q3 2026, with operating margin at 80% and net margin at 65.6%, reflecting strong pricing power and operational efficiency.
The company expects ASP to improve gradually in Q4 2026 and market shortage to continue, with next year likely remaining tight due to long lead times for new capacity.
Nanya Technology Corp (TPE:2408) plans to increase AI infrastructure revenue from over 20% currently to 40-50% by 2029-2030, supported by new fab capacity and long-term agreements.
The company maintains a strong net cash position of TWD270 billion and continues to invest in future growth, with CapEx planned for new fab and technology development.
Negative Points
Bit shipment decreased by mid-single-digit in Q3 2026 due to inventory depletion, and shipment is expected to remain flat until new fab output in second half of 2027.
Operating expenses increased significantly in Q3 2026, with R&D up TWD1.9 billion and SG&A up TWD0.9 billion, mainly due to concurrent and future employee compensation.
DDR4 and low-power DDR4 demand is expected to gradually decline, posing a risk as these products contribute more than 60% of Nanya Technology Corp (TPE:2408)’s revenue.
The company faces substantial CapEx requirements, including USD16 billion for one new fab, which may pressure dividend payout ratio despite a consistent dividend policy.
Nanya Technology Corp (TPE:2408) has no share buyback plans and faces potential cost increases from wafer prices and other supply chain factors, which could impact margins.
Q & A Highlights
Q: Charlie Chan of Morgan Stanley asked about the strength of DDR4 demand and whether high-profile customers like Apple are engaging for supply security.A: President Dr. Pei-Ing Lee stated that DDR4 demand remains strong, taking over 10% of the overall market, while Nanya’s overall market share is in the low single digits. He noted that Nanya is flexible in adjusting its DDR4 and low-power DDR4 products with DDR5 and other products, including AI-related ones. Regarding Apple, he clarified that Nanya does not supply major DRAM to them but may supply specialty DRAM that other suppliers do not provide.
Q: Jay Kwon of JPMorgan asked for quantification of the 60% ASP increase, specifically how much was driven by renewed long-term agreements (LTAs) and if another round of pricing hikes is expected in Q4.A: Dr. Lee explained that the increase was a mix of renewals for one-year or six-month contracts, mostly negotiated in the first, second, or third quarter of last year when ASP was relatively low. He confirmed that more than half of the contribution was due to these long-term agreements, which have now mostly expired, supplemented by Q2 and Q3 quarterly updates.
Q: Jay Kwon of JPMorgan followed up on the AI infrastructure and server segment, asking about its composition and growth expectations.A: Dr. Lee confirmed the segment includes a mix of DDR4, DDR5, and other products for communication, storage, system management, and enterprise SSDs. He projected that this segment, currently over 20% of revenue, is targeted to grow to 40% to 50% by 2029 or 2030, with new fab capacity (30,000 wafers by end of 2028 and 50,000 by end of 2030) primarily allocated to AI infrastructure.
Q: Simon Woo of Bank of America asked about the ASP pricing trend for the December quarter and the outlook for next year.A: Dr. Lee expected the market shortage to continue, with ASP likely to improve gradually over the December quarter. For next year, he anticipated a tight situation due to long lead times for new capacity and construction, with the HBM negotiation outcome being a key factor to watch.
Q: Simon Woo of Bank of America inquired about the demand trend for DDR4 and low-power DDR4, and the revenue mix.A: Dr. Lee stated that demand for DDR4 and low-power DDR4 will correctively get smaller, but the remaining demand is still strong compared to supply. He noted that DDR4 alone still represents over 12% to 14% of total demand. Regarding the revenue mix, DDR5 remains around 10%, while DDR4 and low-power DDR4 combined contribute more than 60% of Nanya’s product mix.
Q: Simon Woo of Bank of America asked about the dividend payout ratio given the company’s profitability and future CapEx needs.A: Dr. Lee said Nanya will balance the need for significant future CapEx (up to USD 16 billion for one fab) with its consistent dividend distribution policy. He confirmed the company will continue to pay dividends next year while managing these two factors.
Q: An analyst from Capital Securities asked about the financing plan, production timeline, and customer demand for the new fab.A: Dr. Lee stated that CapEx for the new fab is not finalized but could reach up to USD 10 billion in the long run. Equipment move-in is targeted for the second half of 2028, with planning mainly for AI application customer demand. He also clarified that wafer-level processing will be done by Nanya, while back-end assembly and testing will involve ATC.
Q: Michael Shen of KGI Securities asked about the current LTA coverage rate and contract terms.A: Dr. Lee revealed that Nanya’s current LTA coverage is around 50% to 70%, with terms ranging from quarterly to three years. Three-year contracts account for more than 20% of output. The company plans to increase long-term contracts as customers are proactive in securing supply, with discussions including full price and ceiling price for new contracts.
Q: Michael Shen of KGI Securities asked if the potential supply/demand gap can be quantified based on DRAM silicon area requirements for AI chips.A: Dr. Lee agreed it was an excellent question and confirmed Nanya has been analyzing this. He stated that the DRAM supply shortage will likely persist for a long time for AI applications. A key indicator to watch is whether the long-term return on AI investments from U.S. CSP providers and AI developers remains sustainable.
Q: An analyst from Yuanta Securities asked about the growth outlook for AI-related business in 2026 and 2027.A: Dr. Lee reiterated the plan to increase AI infrastructure business from over 20% to more than 40% or even 50% gradually by 2029 or 2030. He also noted that Nanya remains shipping DDR4 while gradually transitioning to DDR5, with DDR4 demand still strong and supply in shortage for certain sectors.
Q: Ethan Hsu of E.SUN Securities asked about the company’s order fulfillment rate and bit shipment growth guidance for 2027.A: Dr. Lee stated that for committed long-term orders, the fulfillment rate is maintained at 100%. For 2027, he described it as an “embarrassing” situation for Nanya, as there will not be much big growth in the beginning of the year due to depleted inventory. Bit shipments will likely remain flat for a few quarters until the second half of 2027.
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