Sravan Kundojjala
Semiconductor Industry Analyst at SemiAnalysis
Tight legacy DRAM capacity is lifting Nanya's revenue through pricing even as bit shipments fall. Q3 revenue rose 60% q/q to $4.18B, 4.9x the prior-cycle peak, and gross margin reached 85.7%; ASPs rose over 60% q/q while bits fell mid-single digits. Long-term agreements cover 50-70% of output, with over 20% on three-year terms. Bits will stay flat for several quarters until Fab 5A starts output in Q4 2027. x.com x.comÂ
Nanya Technology is a play on tight legacy DRAM capacity, with rising prices driving record results. June-quarter revenue rose 68% q/q and 684% y/y to $2.61B, about 3x the prior-cycle peak, and gross margin reached 79.5% as ASPs rose over 60% q/q with bit shipments flat. Q3 is guided to further improvement with operating margin above 73.7%. DDR5 is capacity-capped rather than demand-capped, half of contracts are long-term agreements, and AI infrastructure and servers now exceed 20% of revenue. x.com x.comÂ
SK hynix's five-year agreements with 14 major customers cover more than half its 2027-28 capacity, giving its memory earnings unusually long visibility. DRAM prices rose 28% and NAND 25% in the quarter, while operating profit reached 62.8 billion against 58.5 billion expected; Q4 DRAM shipments are guided up 25% from Q3. Those commitments support the view that demand is not peaking yet. Overweight, $400 target. x.comÂ
SK hynix's contracted volumes make revenue more dependable than margins. LTAs cover over half of 2027-28 capacity, but not all demand through 2029 is signed, and prices still move within agreed ranges. Big customers' 2027 HBM volume and pricing are settled; HBM4 yields are ahead of plan. Server DDR5 shipments rose over 40% quarter on quarter, though most of the earnings beat came from pricing. Management expects the HBM profit premium over regular DRAM to narrow next year. x.comÂ
Nanya Technology is in trouble now that Micron plans to quadruple DDR4 production at its Manassas facility using 1a technology, as CEO Sanjay Mehrotra told Bloomberg. That added legacy DRAM capacity hits Nanya's core market directly. x.com x.comÂ
SK hynix's strong pricing and secured capacity could push memory stocks higher. Per Wall St Engine, its Q3 DRAM ASP rose by a high-20s percentage quarter over quarter, while long-term agreements cover more than half of its 2027-28 capacity. Those figures support the memory upcycle. x.comÂ
Prepaid contracts and demand-paced fabs weaken a broad 2028 memory-glut case. SK hynix says over half its 2027-28 capacity is signed with deposits; 'sold out through 2029' includes negotiations. Samsung targets 60-70% contracted capacity. Micron's three projects begin output in 2H28; tooling follows demand. Reuters says CXMT's 20-30%-yield HBM3E may ship this year to export-restricted Chinese buyers, but performs like older HBM3. Commodity DRAM risks 2028-29 oversupply; NAND could ease in 2H27. … Show more
Nanya Technology is a weaker memory name than SK hynix, SanDisk or Micron because it is more concentrated in legacy DRAM, and this year's capex may strain its balance sheet down the line. It has gained only about 35%, a laggard in memory. By contrast, SK hynix and Samsung at about 5.3x and 5.9x forward earnings look like generational compounders, as forecasts point to persistent supply deficits through 2027-2030. x.comÂ
More memory CapEx may yield proportionally fewer bits as HBM consumes more wafer capacity, supporting SK hynix and Samsung's pricing. Both reported double-digit quarterly DRAM and NAND price gains; Samsung targets 60-70% of mid- to long-term capacity under LTAs. SK hynix has the stronger execution record, but Samsung could benefit enormously from conventional memory without winning HBM4. If trends persist, normalized margins could rise, though memory remains cyclical. x.comÂ
Sandisk's datacenter shipments and restrained bit-supply plan strengthen its growth case, without settling contract protection in a downturn. Management attributed roughly 60% of fiscal Q1 revenue growth to volume and 40% to price; datacenter sales rose 61% sequentially to $4.8B, supplying 88% of total growth. It retains mid-to-high-teens bit growth rather than accelerating supply. Consumer sales fell 29%, and the CFO cautioned against carrying Q2's growth rate into fiscal Q3. x.com x.comÂ
SK hynix's stronger pricing and contracted demand support the still-favored memory duration trade. DRAM and HBM capacity is sold out through 2029, and a supply-demand imbalance is expected through 2030. More than half of 2027-28 capacity is under long-term agreements, with agreed 2027 HBM prices significantly higher year on year. Guangfa HK expects fund flows and bearish sentiment to improve after earnings. x.comÂ
Memory remains structurally scarce because SK hynix says conventional DRAM and HBM are practically sold out through 2029, while customers request roughly twice the HBM volume it can produce. Long-term agreements cover more than half of 2027 and 2028 capacity, and the company expects the supply-demand imbalance to persist through 2030. x.com x.comÂ
