Nanya Technology Q1 Net Profit Surges 1442.8%

According to Nanya Technology’s financial report released on April 13, the company delivered exceptionally strong results in Q1 2026, driven by robust artificial intelligence (AI) demand and a sharp surge in average selling prices (ASP) of more than 70%. Revenue, profitability, and earnings all reached record levels, highlighting the strong upcycle in the DRAM market.

In the first quarter, Nanya Technology reported consolidated revenue of NT$49.087 billion, up 582.9% year-on-year and 63.1% quarter-on-quarter. Gross profit reached NT$33.316 billion, increasing 3,200.1% year-on-year and 125.7% sequentially, with a gross margin of 67.9%. Net profit surged 1,442.8% year-on-year to NT$26.058 billion, while earnings per share climbed to NT$8.41, setting a new historical high.

Company General Manager Li Peiying noted that while bit shipments declined slightly in the low single-digit percentage range, the significant rise in ASP more than offset volume softness, driving overall profitability to record highs.

He explained that the modest sequential decline in shipment volume was mainly due to seasonal factors such as the Lunar New Year holiday, product mix adjustments, healthier inventory levels, and deliberate pricing optimization after ASP reached favorable levels. He also emphasized that the strong profitability seen across DRAM suppliers in Q1 reflects a structurally healthy industry cycle, which is expected to remain sustainable.

Looking ahead, Nanya Technology expects continued strength in the DRAM market, driven primarily by AI infrastructure investment from cloud service providers. Demand for high-bandwidth memory (HBM), DDR5, and LPDDR5 is accelerating rapidly, while AI workloads are expanding from cloud data centers into edge computing applications. Although demand for low-end consumer DRAM remains weaker, high-end PCs and premium smartphones continue to show stable demand, supporting a strong long-term outlook.

The company forecasts that ASP for DRAM products will increase by double digits in Q2 2026, with supply conditions expected to remain tight through 2026–2027, resulting in persistent supply shortages across key product segments.

In terms of product strategy, DDR5 currently accounts for around 10% of total revenue, with flexible adjustments planned based on demand. The company continues to supply DDR4 and DDR3 to address market gaps, while its customized AI-oriented ultra-high-bandwidth memory (AI UWIO) has already begun contributing modest revenue from both cloud and edge applications.

On the capacity side, expansion of the Taishan new fab is progressing smoothly. The cleanroom and facility infrastructure are expected to be completed between late 2026 and the end of the year, with equipment installation targeted for Q1 2027, significantly increasing production capacity to support future growth.

On technology development, Nanya Technology continues to advance its 1C/1D generation 10nm-class DRAM processes and EUV-related technologies according to schedule.

Notably, the company completed a private placement on April 8 involving strategic customers including Kioxia, SanDisk, Solidigm, and Cisco, raising NT$78.72 billion. After the placement, these strategic partners hold a combined 10.19% stake, strengthening long-term supply collaboration across DDR5, LPDDR5, DDR4, DDR3, and RDIMM product lines.

Management emphasized that the strategic cooperation aims to reinforce supply chain stability across cloud and data center ecosystems, particularly for high-end SSD and networking applications. The new capital will support capacity expansion and further strengthen Nanya Technology’s position in the AI memory value chain. While long-term supply agreements are increasing under AI-driven demand, the company maintains strict allocation discipline to prevent overstocking and ensure balanced supply-demand dynamics. The financial impact of the private placement is expected to become more visible from Q2 2026 onward.

Regarding concerns over AI memory optimization potentially reducing DRAM usage, management stated that while compression technologies may improve communication efficiency between servers and data centers, decompression still requires memory usage, meaning overall DRAM demand is not expected to decline and may even benefit.

On supply chain risks such as helium availability and geopolitical uncertainties, the company noted that global sourcing diversification—including the United States, China, and other regions—helps mitigate disruption risks, with no immediate supply shortage expected.

Finally, regarding increasing DRAM capacity expansion in mainland China, management believes the impact on global suppliers is limited, noting that sales exposure to China remains stable at around 20% and continues to be supported by long-term agreements.