Group 1 - The NAND Flash market has seen significant improvement in supply-demand balance due to production cuts and inventory reduction in the first half of 2025, with expectations of a 5% to 10% increase in average contract prices for the third quarter [1] - The client SSD market is expected to grow by 3% to 8% in the third quarter, driven by better-than-expected inventory reduction by OEM/ODM, a wave of upgrades due to Windows 10 support cessation, and demand from new CPU launches [1][2] - The enterprise SSD demand is anticipated to continue growing in the third quarter, supported by increasing orders from North American general server demand and strong orders from first-tier Chinese customers, with contract prices expected to rise by 5% to 10% [2] Group 2 - The mobile device segment, particularly eMMC, is expected to see flat demand in the third quarter due to previously satisfied consumer needs and reduced purchasing power, with contract prices projected to increase by 0% to 5% [2] - UFS market demand remains uncertain, with supply limited due to a focus on high-margin products, leading to a forecasted contract price increase of 0% to 5% in the third quarter [2] - The overall NAND Flash output is declining, and manufacturers are prioritizing high-margin products, which is expected to result in wafer prices increasing by 8% to 13% in the third quarter [3]

TrendForce集邦咨询表示，Client SSD市场因OEM/ODM上半年去化库存情况优于预期，增强第三季 回补动能。同时Windows 10停止支持、新一代CPU推出引发的换机潮，以及中国DeepSeek一体机热 潮，皆带动Client SSD需求。此外，部分原厂积极推动大容量QLC产品，带动出货规模。综合以上因 素， 预估第三季Client SSD合约价将季增3%至8% 。 今年NVIDIA Blackwell平台出货量逐季升高，且北美地区通用型Server需求正在扩大，中国一线客户 的强劲订单动能可望延续至下半年，将激励第三季Enterprise SSD需求持续成长。然而，因订单增长 过快，部分供应链厂商交货未能跟上，加上原厂于年初下修产能， 第三季Enterprise SSD合约价将 上涨5%至10% 。 July 9, 2025 产业洞察 根据TrendForce集邦咨询最新调查，NAND Flash市场历经2025年上半年的减产与库存去化，供 需失衡情况已明显改善。随着原厂转移产能至高毛利产品，市场流通供给量缩减。需求面则有 企业加码AI投资，以及NVIDIA（英伟达）新一代Blackwel ...

Specialist Sales APAC Specialist Sales 20 May 2025 Duncan Wagner +852 2800 8874 duncan.wagner@jpmorgan.com J P M O R G A N Mediatek today Computex keynote 11am-12pm TPE time (link below): focus: ASICs into 2H26, GB10 sell-thru, flagship smartphone gains. ASPEED revised up 2Q revenue guidance, likely seeing share gain from new Intel platform - Albert Hung re- iterates O/W. Matthew Henderson upgrades SHIFT -> O/W, raises PT -> Y1,900 on broad-based projects strength. Gokul highlights SIMO share gain at TMC. N ...

Financial Data and Key Metrics Changes - Revenue for the third quarter was $1.7 billion, down 10% sequentially and down 1% year over year [8][17] - Non-GAAP EPS was a loss of $0.30 per share, at the high end of the guidance range [19] - Cash and cash equivalents increased from $1.3 billion to $1.5 billion [19] Business Line Data and Key Metrics Changes - Client revenue was $927 million, down 10% sequentially [17] - Consumer revenue was $571 million, down 5% quarter over quarter [17] - Cloud revenue was $197 million, down 21% sequentially [17] - ASPs were down high single digits, reflecting continued oversupply in the market [9][18] Market Data and Key Metrics Changes - Analysts estimate cloud CapEx from major hyperscale providers grew over 50% to approximately $240 billion in calendar year 2024, expected to reach approximately $330 billion in 2025 [14] - Bit allocation to enterprise SSD applications represented 12% of total bits this quarter, up from 8% in the same quarter of the prior year [15] Company Strategy and Development Direction - The company aims to create value for customers and shareholders while reaffirming leadership in the NAND market [5] - Focus on capital discipline and driving higher returns on invested capital [7] - Plans to reduce wafer production to align supply with demand and enable sustainable pricing [9] Management's Comments on Operating Environment and Future Outlook - Management sees an undersupplied market through the end of next year, with expectations for pricing to start increasing [29] - Positive signs include strengthening transactional markets and encouraging customer engagements [21] - The company expects demand to strengthen throughout the year, driven by various factors including the Windows 10 end of life and post-pandemic PC refresh [21] Other Important Information - The company recorded a non-cash impairment charge of $1.83 billion for goodwill, reducing the goodwill balance to $5 billion [19] - Non-GAAP gross margin for the third quarter was 22.7%, with expectations for the fourth quarter to be between 25.5% and 27% [18][22] Q&A Session Summary Question: Can you discuss the supply-demand situation and the actions taken? - Management sees an undersupplied market through the end of next year and is taking prudent actions to balance supply and demand [29][30] Question: How is the enterprise SSD market performing? - Demand has been consistent, with expectations for significant revenue growth in the enterprise SSD segment [35] Question: What are the expectations for NAND bit shipments? - The company expects NAND bit volume to grow low double digits this calendar year, with good visibility across various markets [57][60] Question: How does the company view pricing trends? - Management believes the market is turning, with price increases expected due to improved demand across the board [82] Question: What is the impact of the yen exchange rate on costs? - The front end is exposed to the yen, but not all costs are yen-denominated, which should be considered in modeling [85]

Financial Data and Key Metrics Changes - Revenue for the third quarter was $1.7 billion, down 10% sequentially and down 1% year over year [7][15] - Non-GAAP EPS was a loss of $0.30 per share, at the high end of the guidance range [18] - Cash and cash equivalents increased from $1.3 billion to $1.5 billion [18] Business Line Data and Key Metrics Changes - Client revenue was $927 million, down 10% sequentially [16] - Consumer revenue was $571 million, down 5% quarter over quarter [16] - Cloud revenue was $197 million, down 21% sequentially [16] - ASPs were down high single digits, reflecting continued oversupply in the market [8] Market Data and Key Metrics Changes - Analysts estimate cloud CapEx from major hyperscale providers grew over 50% to approximately $240 billion in calendar year 2024, expected to reach approximately $330 billion in 2025, a 40% increase [13] - Bit allocation to enterprise SSD applications increased to 12% this quarter, up from 8% in the same quarter of the prior year [13] Company Strategy and Development Direction - The company aims to create value for customers and shareholders while reaffirming leadership in the NAND market [5] - Focus on capital discipline and driving higher returns on invested capital [6] - Plans to reduce wafer production to align supply with demand and enable sustainable pricing [8] Management's Comments on Operating Environment and Future Outlook - Management sees an undersupplied market through the end of next year, with expectations for pricing to start increasing [26][27] - Positive signs include strengthening transactional markets and encouraging customer engagements [20] - The company expects revenue for the fourth quarter to be between $1.750 billion and $1.850 billion, assuming bit shipments to be flat and ASP to be up mid to high single digits [19] Other Important Information - The company recorded a noncash impairment charge of $1.83 billion, reducing the goodwill balance to $5 billion [18] - The company is beginning to move away from providing explicit guidance on cost per bit due to industry cost reductions from technology migrations [22] Q&A Session Summary Question: Can you discuss supply and demand dynamics? - Management sees an undersupplied market through the end of next year, with expectations for pricing to start increasing [26][27] Question: How is the enterprise SSD market performing? - Demand has been consistent, with expectations for a tripling of enterprise SSD revenue from FY 2024 to FY 2025 [34] Question: What are the expectations for gross margins? - Headwinds include underutilization charges and fab startup costs, but higher ASPs are expected to help gross margins overall [38] Question: How is the company managing capacity and bit growth? - The company is carefully managing capacity to avoid oversupply while ramping up higher layer count and more density per wafer [41] Question: What is the outlook for NAND bit shipments? - The company expects NAND bit volume to grow low double digits this calendar year, with good visibility across various markets [56][58] Question: How does the yen exchange rate impact costs? - The front end is exposed to the yen, but not all costs are yen-denominated, which should be considered in modeling [81]