Summary of Conference Call on Greater China Semiconductors Industry Overview - The focus is on the semiconductor memory market, particularly old memory types such as NOR, MLC NAND, and DDR4 - The analysis indicates a significant shift in supply-demand dynamics, with expectations of reduced support from mainstream memory vendors for older memory types [1][3] Key Points Memory Supply-Demand Dynamics - The memory supercycle is expected to further squeeze support for old memory types, with expectations that commodity memory supply will be fully sold by 2026 [3] - Forecasts indicate a 26% undersupply for DDR4 in 2026, up from a previous estimate of 20%, driven by reduced support from Korean vendors [4] - MLC NAND is projected to face a 30%+ undersupply in 2026, with Samsung, Kioxia, and Micron potentially reducing supply [5] - NOR memory is expected to see an 8% undersupply in 2026, an increase from 5%, due to declining supply from US vendors [6] Pricing Power and Market Sentiment - There is a bullish sentiment on old memory, with analysts recommending buying on dips [1][3] - Pricing for DDR4 and MLC NAND is expected to rise, with significant price hikes noted for smartphone products (60-70% QoQ) and server DDR5 pricing increasing by 100% QoQ [59] - The pricing for consumer NAND is anticipated to increase by 30-40% QoQ, while eSSD pricing may rise by 50-70% QoQ [59] Company-Specific Insights - Price targets for several companies have been raised, including: - Nanya Technology Corp: NT$298.00 to NT$348.00 - Winbond Electronics Corp: NT$130.00 to NT$155.00 - Powerchip Semiconductor: NT$77.00 to NT$88.00 - Macronix International: NT$93.00 to NT$121.00 - GigaDevice Semiconductor: Rmb355.00 to Rmb414.00 [7] AI and Memory Demand - The shift towards AI, particularly Agentic AI, is driving massive demand for DRAM and NAND memory, necessitating higher memory capacity and performance [34][35] - The memory requirements for AI inference are increasing, with projections indicating that AI inference demand will account for significant portions of global memory supply in 2026 [49] Market Risks and Considerations - The potential for supply shortages poses risks, particularly for automotive applications [5] - The overall DRAM industry demand is expected to grow by 20% YoY in 2026, driven by strong order demand from cloud service providers [59] Additional Insights - The analysis highlights the importance of memory in AI development, noting that memory is becoming a critical bottleneck as AI systems evolve [29][33] - The report emphasizes the need for architectural and software-level memory efficiency to address the increasing memory demands of AI applications [29][33] This summary encapsulates the key insights and projections regarding the semiconductor memory market, highlighting the implications for pricing, supply-demand dynamics, and the impact of AI on memory requirements.

Summary of Conference Call Notes on Greater China Semiconductors Industry Overview - The focus is on the semiconductor industry in Greater China, particularly memory stocks and companies involved in integrated device manufacturing (IDM), foundry services, and IC design. Key Companies Discussed 1. **Winbond** - Remains the top pick for investment in the sector [1] 2. **Macronix** - Plans to raise fab utilization and execute pricing power, delaying 3D NOR development [4] - Will invest NT$22 billion (~US$700 million) to increase 12-inch fab production capacity from 20k to 30k wafers per month, addressing an "extreme shortage" in eMMC [4][10] - Expected to catch up on NOR pricing hikes and respond to MLC market undersupply from 1Q26 [10] 3. **Powerchip** - Anticipated re-rating due to a partnership with Micron, with potential long-term benefits from advanced DRAM production [5] - Valuation methodology changed to book value, with a price target set at NT$77, based on 1.7x book value per share (BVPS) [5][34] - Expected earnings upside and pricing power from 2Q26 [10] 4. **GigaDevice** - More disciplined in pricing adjustments, focusing on new business areas [6] - Expected to show meaningful margin expansion in 1H26 [10] Market Dynamics - IDMs are leading the cycle outperformance, with laggards expected to catch up in share price performance [3] - The under-guidance from Nanya Tech presents a good entry point for investors [3] - The memory up-cycle is anticipated to continue, with 1Q26 marking the third quarter of this cycle [3] Financial Projections - Earnings estimates and price targets have been raised for Macronix, GigaDevice, and Powerchip [10] - Macronix's price target increased from NT$72.50 to NT$93.00 [7] - GigaDevice's price target raised from RMB288.00 to RMB355.00 [7] - Powerchip's price target increased from NT$56.00 to NT$77.00 [7] Additional Insights - The semiconductor industry is experiencing a shift with increased demand for specialty DRAM and NAND products, driven by consumer electronics [41] - The pricing power in the industry is expected to remain strong into 2026, with potential risks from competition and inventory levels [51] - The overall sentiment remains positive, with a focus on the long-term benefits of partnerships and technological advancements in production processes [39][41] Conclusion - The semiconductor sector in Greater China is poised for growth, with specific companies like Winbond, Macronix, Powerchip, and GigaDevice expected to perform well. The anticipated pricing power and market dynamics suggest a favorable investment environment, despite potential risks from competition and market fluctuations.

Summary of Conference Call on Memory Market Dynamics Industry Overview - The conference call focuses on the memory market, specifically DRAM and NAND sectors, in the context of increasing AI demands and evolving architectures [1][2][3]. Key Insights and Arguments - **Increased Demand from AI**: The reliance on memory in AI systems is growing, with AGI systems requiring enhanced memory capabilities for context understanding and long-term learning. This is expected to significantly increase the demand for DRAM and SSDs [2][4]. - **Projected Memory Consumption**: It is estimated that by 2026, text reasoning alone will consume approximately 35% of global DRAM supply and 90% of NAND supply, indicating a structural increase in overall memory demand [3][4]. - **Price Forecasts**: - DRAM prices are expected to rise by 50%-60% in Q1 2026, with some manufacturers anticipating even higher increases. NAND prices are projected to increase by 50%-80% during the same period [5][6]. - A consensus for Q2 indicates a price increase of 15%-20%, with significant pricing power still expected [5][6]. - **Supply Shortages**: The MLC NAND market is facing severe supply shortages, with global production capacity dropping by 60% due to reductions by major players like Samsung and Micron. This is expected to lead to a price increase of around 400% [10]. Additional Important Points - **Deepseek Ingress Architecture**: The introduction of the Ingress architecture by Deepseek optimizes memory and reasoning separation, enhancing performance without increasing memory usage. This shift indicates a competitive advantage for Chinese AI development in system design [4]. - **CSP Long-term Contracts**: U.S. Cloud Service Providers (CSPs) are signing long-term contracts to ensure CPU supply, which is driving strong demand for server DRAM and impacting older memory markets like DDR4 and low-tier NAND [6][7]. - **Market Dynamics**: The overall memory market has seen a significant shift in supply and demand dynamics over the past year, with supply decreasing faster than demand, particularly in the DDR4 segment [8][9]. - **Impact on End Products**: Rising memory costs are expected to affect end products such as PCs and smartphones, with anticipated declines in shipments for PCs and Chinese Android phones by approximately 10% and 8-10%, respectively [13]. Conclusion - The memory market is entering a phase of significant price increases and supply constraints driven by the growing demands of AI applications and evolving architectures. The strategic moves by major players and the introduction of innovative technologies will shape the future landscape of the memory industry.

Group 1 - The core viewpoint of the articles indicates that Winbond Electronics has shown a positive trend in its financial performance, with significant revenue growth in December 2025 compared to previous months and the same period last year [1][3] - The consolidated revenue for December 2025 reached NT$26.32 billion, marking a 7.7% increase from NT$24.44 billion in November and a substantial 44.9% increase year-over-year [1] - The total consolidated revenue for the fourth quarter was NT$77.33 billion, reflecting a decline of over 5% from the third quarter and a slight decrease compared to the same period in 2024 [1] Group 2 - For the full year of 2025, the consolidated revenue amounted to NT$288.8 billion, representing an 11.6% year-on-year growth [1] - Inventory levels decreased to approximately NT$101 billion in the third quarter, down from NT$121 billion in the second quarter, indicating ongoing inventory reduction which may support future gross margin recovery [1] - The operational outlook for Winbond is optimistic due to the exit of major international competitors from the market and a rebound in demand from the automotive and industrial control sectors [3] Group 3 - NOR Flash prices are expected to continue rising in the first half of the year, providing Winbond with an opportunity to achieve profitability [3] - The transition of SLC NAND production from 36nm to 19nm is anticipated to lower unit costs [3] - The exit of international manufacturers from the MLC NAND market is expected to enhance Winbond's shipping opportunities in eMMC and related applications [3]

Group 1 - The storage chip market is experiencing a significant surge in prices, leading to increased instances of counterfeit products and labels [1][7][10] - Two recent cases highlighted by a distributor, Amy, involved abnormal labeling on storage chips, raising concerns about authenticity [2][3] - The price of a common 8G DDR4 chip has skyrocketed from $1.7 in March to over $20, reflecting a more than tenfold increase since the beginning of the year [8][10] Group 2 - The influx of new participants in the storage market has complicated the trading chain, resulting in longer transaction paths and increased risk of counterfeit products [7][10][12] - Distributors are advised to prioritize purchasing from established channels and to verify labels and products before payment to mitigate risks [12][13] - The current market dynamics have created a divide among distributors, with some successfully navigating the market while others struggle due to lack of channels or customers [14]

Core Viewpoint - The storage chip market is experiencing significant price increases and heightened activity, but this has also led to a rise in counterfeit products and labeling issues, indicating growing risks in the market [3][9][10]. Group 1: Market Activity and Trends - The storage chip market has become the most active segment in the current year, with prices continuously rising and market sentiment remaining strong [3]. - Since early this year, storage chip prices have been on an upward trend, particularly after major manufacturers announced production halts for DDR4 chips, which further fueled price increases [9][10]. - For instance, the price of a common 8G DDR4 chip from Samsung surged from $1.7 in March to over $20 by the end of October, representing an increase of more than 10 times [10]. Group 2: Counterfeit and Labeling Issues - Recent cases have highlighted the emergence of counterfeit labels in the storage chip market, with distributors encountering issues where labels did not match standard formats [5][6]. - Social media reports have also surfaced, showing instances of counterfeit products, such as chips being misrepresented with incorrect specifications [6]. - The increase in market participants has led to longer transaction chains and more opportunities for counterfeit products to enter the market, raising the risk of encountering fake goods [13][14]. Group 3: Changes in Distribution Dynamics - The influx of new participants in the storage market has resulted in a more complex trading environment, with many transactions occurring between traders and stockpilers rather than directly with end-users [11][13]. - Distributors have noted that the current market dynamics have led to increased turnover and a higher likelihood of encountering counterfeit products, especially as the market heats up [13][15]. - The competitive landscape has shifted, with some distributors successfully navigating the market while others struggle due to lack of established channels or customer bases [15]. Group 4: Recommendations for Distributors - Distributors are advised to prioritize sourcing from established and reputable channels to mitigate risks associated with counterfeit products [14][16]. - It is crucial for distributors to verify labels and inspect products before making payments to avoid purchasing counterfeit goods [14][16]. - The current market conditions necessitate a cautious approach, emphasizing the importance of risk management over speculation [16].

Group 1 - The storage chip sector has seen a significant surge, with companies like Maiwei Co., Ltd. (300751) rising over 18%, and others like Shannon Semiconductor (300475) and Jiangbolong (301308) increasing by approximately 15% [1] - Reports indicate that the spot prices of storage chips have skyrocketed recently, with DDR4x particles experiencing a price increase of over 400% this year, leading to a "hoarding" phenomenon in the supply chain [1] - End manufacturers, such as mobile phone producers, are facing historically low inventory levels, generally below 4 weeks, which is below the healthy range of 8-10 weeks, resulting in a "passive replenishment" situation under supply chain constraints [1] Group 2 - CITIC Securities notes that since September, the storage market has shifted to a seller's market, with price increases spreading across all categories and accelerating [2] - Looking ahead, enterprise SSD contract prices for NAND are expected to rise by over 50% in Q4 2025 and Q1 2026, while DDR4 8Gb products have seen a price increase of approximately 350% from March to September [2] - The overall storage sector is in the early stages of a super cycle, with high visibility of shortages expected to continue at least until the end of 2026, indicating a positive outlook for the sustainability of this structural cycle [2]

Summary of Conference Call on Greater China Semiconductors Industry Overview - The focus is on the **semiconductor industry** in Greater China, particularly on **old memory stocks** such as DDR4, MLC NAND, and NOR Flash [2][3][6]. Key Insights 1. **Pricing Power and Market Dynamics**: - The pricing power for DDR4, MLC NAND, and NOR is expected to strengthen into 2026, indicating a bullish outlook for old memory stocks [2][3]. - Old memory contract pricing began to rise in late Q3 2025, suggesting a potential super-cycle driven by undersupply [3][4]. 2. **Earnings Projections**: - Consensus earnings for 2026 are anticipated to increase significantly, with a typical old memory up-cycle lasting 3-4 quarters [3][6]. 3. **DDR4 Market Conditions**: - Preliminary pricing negotiations for Q1 2026 are favorable, with potential contract pricing increases exceeding 100% due to strong enterprise demand [4][10]. - DDR4 16Gb is experiencing a significant shortage, with spot prices reaching **US$100**, up from **US$45.5** [4]. 4. **Flash Product Supply Cuts**: - Supply cuts in MLC NAND and expected cuts in NOR are driving up prices, with NOR pricing projected to increase by over 20% in Q1 2026 [5][10]. - NOR undersupply is expected to widen to high single digits percentage-wise in 2026 [5]. 5. **Investment Recommendations**: - The top pick remains **Winbond**, with expectations of further upside in NOR and DRAM pricing and bit shipment output into 2026 [6]. - Other recommended stocks include **Nanya Tech**, which reported a **29% month-over-month sales increase** in November, and **GigaDevice**, **Macronix**, **APMemory**, and **PowerChip** [6]. Additional Insights - The semiconductor industry is characterized by cyclical trends, and the current up-cycle is expected to last longer than typical cycles [6]. - The report emphasizes the importance of monitoring pricing trends and supply dynamics in the semiconductor market to identify investment opportunities [3][5][6]. Conclusion - The semiconductor industry in Greater China is poised for growth, particularly in the old memory segment, with strong pricing power and favorable market conditions expected to drive earnings higher in 2026. Investors are encouraged to consider the highlighted stocks for potential investment opportunities.

Summary of Conference Call on Greater China Semiconductors Industry Overview - The focus is on the **old memory** segment within the **semiconductor industry** in Greater China, particularly regarding **DDR4** and **NAND** memory products [1][2]. Key Points and Arguments Market Correction and Outlook - There has been a **correction in stock prices** of old memory players, but the outlook remains **bullish** on old memory, with **Winbond** identified as a **Top Pick** [1][2]. - A **structural DDR4 supply shortage** is anticipated, alongside significant **pricing upside** due to a widening undersupply gap in **MLC NAND** and **NOR** [2]. Capacity Expansion - There is **no major DDR4 capacity expansion** expected from the big three vendors or **CXMT**, as they are focusing on **HBM4/HBM3e** and **DDR5** to pursue a larger **Total Addressable Market (TAM)** [3]. - **Winbond** plans to expand its DDR4 capacity from **15kwpm** to **24-25kwpm** by **2027**, but this will not alleviate the supply shortage expected in **2026**, where Winbond is projected to account for only **~12%** of total capacity supply [4]. Demand Resilience - Demand for **legacy DRAM** remains resilient post-price hikes due to: 1. Impracticality of shifting from **DDR4 to DDR5** for certain applications. 2. Risks to system stability and compatibility with DDR5. 3. Low percentage of DRAM in the **Bill of Materials (BOM)** for various systems [5]. Memory Cycle and Valuation - The memory cycle typically spans **4-6 quarters**, and the current cycle is only about **two quarters** in. The **DDR4 structural supply shortage** and pricing upside are unprecedented, driven by the **AI megatrend** [6]. - There is potential for further price hikes, with **DDR4 contract pricing** expected to rise multiple times from the trough, and spot prices may also see an increase due to low inventory levels [6]. Recent Price Correction - The recent correction in memory pricing is attributed to **technical and positioning factors** rather than fundamental changes in pricing, earnings outlook, or supply-demand dynamics. A recommendation to **buy on dips** is suggested [7]. Additional Insights - The **valuation methodology** for Winbond is based on a **3.0x 2026e P/B**, reflecting the industry's high volatility and strong DRAM pricing upside [11]. - Risks to the upside include stronger-than-expected demand for **NOR Flash** and **DRAM pricing**, while risks to the downside involve potential oversupply and slower development in **SLC NAND** [13]. Conclusion - The semiconductor industry, particularly in the old memory segment, is poised for significant developments despite recent stock price corrections. The focus on DDR4 and the strategic moves by companies like Winbond indicate a complex but potentially lucrative landscape for investors in the coming years.

Summary of Conference Call on Greater China Semiconductors Industry Overview - **Industry**: Greater China Semiconductors - **Focus**: Memory products, particularly DDR4 and NAND Flash technologies Key Points Demand and Pricing Trends - **DDR4 Demand**: DDR4 is critical not only for datacenter switches but also for GPU servers, CPU servers, and storage servers, indicating a structural demand that could lead to significant pricing hikes into Q1 2026 [3][10] - **HDD/eSSD Contribution**: HDD and eSSD are expected to account for approximately 7% of global DDR4 demand in 2025, with a significant rise anticipated in 2026 due to strong demand [4] - **Spot Pricing Concerns**: The market is overly concerned about high spot pricing for DDR4 16Gb, with expectations of upside due to low channel inventory [4] NAND Flash Market Dynamics - **MLC NAND Production Cuts**: Samsung's reduction in MLC NAND production could decrease global capacity by over 20%, leading to potential double-digit price increases in Q1 2026 [5] - **NOR Flash Supply Issues**: An undersupply of 3-5% for NOR Flash is expected to persist into 2026, driven by rising demand for CPU/GPU servers and TWS earbuds [5] Company-Specific Insights - **Top Picks**: Winbond is highlighted as a top pick, with expectations of significant gross margin expansion in 2026 due to pricing hikes across memory product lines [6][10] - **Price Target Adjustments**: Price targets for Winbond, Nanya, PSMC, and Macronix have been raised, reflecting improved market conditions and pricing power [8][10] - **Winbond's Earnings Estimates**: EPS estimates for Winbond have been increased by 2% for 2025, 36% for 2026, and 18% for 2027, driven by stronger pricing for specialty DRAM and NOR Flash [28] Valuation and Market Sentiment - **Valuation Methodology**: Winbond's price target is raised to NT$88, using a P/B multiple methodology, reflecting strong DRAM pricing upside and sustainable NOR pricing hikes [31][36] - **Market Sentiment**: The consensus rating distribution shows 89% of analysts rating the stocks as overweight, indicating strong market confidence [42] Risks and Considerations - **Market Volatility**: The semiconductor industry is characterized by high earnings volatility, which could impact stock valuations [31] - **Potential Headwinds**: There are anticipated headwinds for the logic business, which could affect overall market dynamics [43] Additional Insights - **Long-term Opportunities**: Engagement with multiple foundry partners and customers in the CUBE segment is expected to yield meaningful opportunities in 2026 [43] - **Regional Exposure**: Winbond has significant revenue exposure to Mainland China, which constitutes 40-50% of its market [46] This summary encapsulates the critical insights from the conference call, focusing on the semiconductor industry's dynamics, particularly in memory products, and the outlook for key players in the market.