GigaDevice(SH:603986)2025-09-18 01:46Summary of Conference Call on Greater China Semiconductor Industry Industry Overview - The conference call discusses the Greater China Semiconductor industry, focusing on memory products, particularly NOR Flash, SLC NAND, and DDR4/DDR5 technologies [1][2]. Key Points and Arguments Memory Supply Dynamics - NOR Flash Pricing Trends: There is an expected ongoing pricing hike into 2026 due to supply constraints, with a projected low single-digit percentage undersupply, particularly in the first half of 2026 [3][11]. - SLC NAND Demand: Strong demand from cloud AI is leading to a cannibalization of legacy NAND capacity, potentially creating a double-digit percentage supply shortage as major suppliers reduce legacy NAND production [4][16]. - DDR4 Market Outlook: The outlook for DDR4 has improved, with expectations of a 10-15% undersupply in the 4Q25 to 2Q26 period. DDR5 pricing is stabilizing and tracking up by 9% in 4Q25, driven by cloud server rush orders [5][11]. Company-Specific Insights - Winbond Electronics Corp: - Price target raised to NT$38, indicating a 30% upside, supported by a stabilized MCU business and pricing upside across DDR, NOR, and NAND segments [6][45]. - Earnings estimates for 2026 and 2027 have been raised by 21% and 12%, respectively, due to positive outlooks on specialty DRAM and NOR Flash pricing [42][45]. - Macronix International Co Ltd: - Double upgrade to Overweight as a major beneficiary of NOR price hikes, with expectations of turning profitable in 2026 [6][31]. - Price target raised to NT$29, reflecting a significant improvement in earnings forecasts driven by NOR and NAND pricing increases [24][31]. - Earnings estimates for 2026-27 have been revised upwards, with NOR wafer ASP expected to improve by 6%, 30%, and 32% from 2025 to 2027 [19][20]. Market Sentiment and Risks - The market has reacted positively to recent price hikes, but there is uncertainty regarding the sustainability of these increases into 2026. The structural supply-demand imbalance suggests a more sustainable price increase [17][18]. - Potential risks include unexpected capacity increases from vendors or declines in demand in certain end markets, which could affect pricing and supply dynamics [18][39]. Financial Projections - Macronix's projected net sales for 2025 are NT$29.222 billion, with a significant expected growth of 27.3% in 2026 [40]. - Winbond's projected net sales for 2026 are NT$105.723 billion, reflecting a 3% increase from previous estimates [43]. Additional Important Insights - The conference highlighted the cyclical nature of the memory industry, emphasizing the importance of pricing power and supply constraints in determining future profitability [28][47]. - The potential impact of new product launches, such as the Switch 2, on ROM sales was also noted as a long-term growth driver for companies like Macronix [31]. This summary encapsulates the key insights and projections discussed during the conference call, providing a comprehensive overview of the current state and future outlook of the Greater China Semiconductor industry.