GigaDevice(SH:603986)2025-09-22 01:00Summary of Conference Call Notes Industry Overview - Industry: Greater China Semiconductor, specifically focusing on memory products such as NOR Flash, SLC NAND, and DDR4/DDR5 - Key Theme: The impact of AI growth on memory supply and pricing dynamics, particularly in legacy memory segments Key Points and Arguments Memory Pricing Dynamics 1. NOR Flash Pricing: Expected ongoing price hikes into 2026 due to supply constraints, with a projected low single-digit percentage undersupply in 1H26 [3][11] 2. SLC NAND Demand: Strong demand from cloud AI is leading to a reduction in legacy NAND capacity, potentially creating a double-digit percentage supply shortage [4][16] 3. DDR4 Outlook: Improved outlook for DDR4 with a projected 10-15% undersupply in 4Q25-2Q26, driven by a +9% increase in DDR5 pricing due to cloud server rush orders [5][11] Company-Specific Insights 1. Winbond Electronics Corp: Price target raised to NT$38 (30% upside) due to stabilized MCU business and pricing upside across DDR/NOR/NAND [6][45] 2. Macronix International Co Ltd: Double upgrade to Overweight as a major beneficiary of NOR price hikes, expected to turn profitable in 2026 [6][31] 3. GigaDevice Semiconductor: Price target raised due to better pricing outlook for DDR4 and NOR Flash [6] Financial Projections 1. Macronix Earnings Estimates: Revised EPS forecasts for 2026-27 show improvements driven by increased wafer ASP estimates for NOR and NAND, with expected NOR wafer ASP improvements of 6%, 30%, and 32% from 2025-27 [19] 2. Winbond Earnings Estimates: EPS estimates for 2026 and 2027 raised by 21% and 12% respectively, reflecting positive outlook on specialty DRAM and NOR flash [42] Valuation Methodology 1. Macronix Valuation: Price target raised to NT$29 from NT$16.5, using a P/B multiple methodology reflecting expected net profit turnaround [24][28] 2. Winbond Valuation: Price target raised to NT$38 from NT$30, with a target multiple of 1.5x 2026e BVPS [45][47] Risks and Considerations 1. Market Sentiment: The market has reacted positively to price hikes, but there is uncertainty regarding sustainability into 2026 [17] 2. Potential Risks: Unexpected capacity increases or declines in demand could impact pricing and supply/demand dynamics [18] Additional Important Insights - Investment Drivers: The memory market is expected to see significant growth due to AI-driven demand, with NOR Flash revenue projected to grow by over 30% in 2025 and 60% in 2026 [33] - Risk-Reward Analysis: Macronix and Winbond are positioned favorably with strong pricing power and potential for profitability, but remain subject to market volatility and demand fluctuations [28][47] This summary encapsulates the key insights from the conference call, highlighting the dynamics of the semiconductor memory market and the specific outlook for key players in the industry.