Nanya Technology's legal meeting announces profit turnaround: Behind the shift to profitability and the surge in capital expenditure to 50 billion

Memory chip giant Nanya Technology (2408) recently held an online investor conference, announcing its 2025 Q4 financial results and providing operational outlooks for 2026. The key message of the presentation pointed to a critical turning point: Nanya not only achieved a turnaround from loss to profit but also announced a capital expenditure increase from NT$13.4 billion to NT$50 billion, fully pushing forward the construction of a new 10-nanometer factory. Behind this shift reflects a major opportunity driven by the AI wave and structural supply-demand imbalance in the DRAM industry.

Record Q4 Profit, EPS Reaches NT$3.58, Reversing Years of Loss

Nanya demonstrated strong recovery momentum in Q4 2025, with financial indicators signaling that the DRAM industry has officially exited a prolonged inventory digestion cycle. The consolidated revenue for the quarter reached NT$30.094 billion, a 60.3% increase quarter-over-quarter; net profit attributable to the parent was NT$11.083 billion, with a record-breaking EPS of NT$3.58—more than six times higher than the previous quarter and breaking a nearly 20-quarter low.

This performance is especially notable for the sharp rebound in gross margin, which jumped from 18.5% last quarter to 49.0%. This nearly 30 percentage point increase reflects the combined effect of two core drivers. First, capacity shifts on the supply side led to an average selling price increase of over 30% for traditional DRAM. Second, the rising penetration of DDR5 and the optimization of high-end product mixes further enhanced marginal contributions.

Looking at the full year 2025, Nanya’s total consolidated revenue reached NT$66.587 billion, with an annual EPS of NT$2.13, ending two consecutive years of annual losses. This figure is highly significant for Nanya—it marks a turning point in the industry cycle and lays a foundation for aggressive future investments.

Tight DRAM Supply, DDR5 Penetration Drives Price Rise

Nanya’s CEO Li Peiying pointed out during the conference that the DRAM market in 2026 will continue to experience structural supply-demand imbalance. This imbalance stems from dual misalignments on both supply and demand sides.

On the demand side, AI effects are spreading from cloud to edge computing. Continuous demand from AI servers for high-end capacity keeps DDR5 and new memory standards in a normal state of shortage. Meanwhile, the end market is experiencing a hardware upgrade wave, with AI PCs and generative AI smartphones significantly increasing onboard memory capacity. The steady recovery of consumer electronics applications also supports strong overall bit demand growth.

On the supply side, key variables come from capacity restructuring. The three major global manufacturers (Samsung, SK Hynix, Micron) strategically shift large portions of capacity toward high-bandwidth memory (HBM) production. Since HBM consumes about 2 to 3 times more wafer area than standard DRAM, this capacity shift severely constrains traditional DRAM supply, intensifying market tightness. Nanya expects DRAM contract prices in Q1 2026 to remain on an upward trend, although the quarter-over-quarter increase may not match the extreme slope of Q4. With buyer inventory levels low and suppliers maintaining a firm stance on wafer allocation, the upward momentum remains clear. Notably, due to structural supply gaps, DDR4 prices are expected to be more resilient and lead in price increases among memory standards.

Capital Expenditure Surges to NT$50 Billion, Nanya Accelerates 10nm Process Deployment

Another major highlight from the conference is the dramatic expansion of investment scale. Nanya officially announced that its capital expenditure for 2026 will be increased to NT$50 billion, a 2.7-fold jump from the previous year. This aggressive investment decision demonstrates the company’s strategic shift from stable operations to accelerating technological upgrades following improved profitability.

In terms of capital allocation, Nanya adopts an infrastructure-first approach. About 70% of the total budget will be invested in the Taishan new fab for facility systems and high-grade cleanroom construction, while the remaining 30% will be used for key production equipment procurement and installation. According to operational plans, equipment installation at Taishan is scheduled to begin in Q1 2027, with mass production targeted by the first half of 2027. By the second quarter of 2028, monthly wafer output will reach 20,000 units, with process technology directly advancing into the third-generation (1C) and fourth-generation (1D) 10nm nodes, optimizing bit output and energy efficiency.

In terms of product portfolio, Nanya has successfully completed validation of 128GB DDR5 RDIMM modules and is actively developing customized AI projects. This move signifies the company’s effort to bridge the technological gap with the three major global manufacturers in AI infrastructure supply chains, aiming to secure a competitive edge in high-value memory markets.

Stock Price Hits NT$275, All-Time High; Future Risks and Variables

Prior to the conference, Nanya’s stock price had already begun to heat up. As the profitability turnaround was confirmed, the stock surged at the open, hitting the daily limit-up at NT$275, setting a new record high. However, the future stock trend will depend on two key variables.

First is profit realization and subsequent selling pressure. Since Nanya is currently classified as a disposal stock, buying momentum is limited. Some short-term funds may take profits after the positive news is confirmed, leading to short-term consolidation at high levels. Second is valuation recalibration. Recently, U.S. institutional investors have raised target prices for Taiwanese memory stocks across the board. Based on 2026 EPS estimates and gross margins of up to 49%, Nanya’s price-to-book ratio still has room for further upward adjustment.

Although short-term correction pressures exist due to the large gains and the disposal period, the fundamental support from continued Q1 price increases and rising DDR5 penetration suggests a long-term bullish trend for Nanya’s stock.

A critical risk factor to watch is the NT$50 billion capex, which will generate substantial depreciation expenses. Over the next two years, Nanya’s operating profit must remain at high levels to support the financial burden of this scale of investment. In other words, the real test for Nanya lies not just in the impressive turnaround of the past quarter but in whether it can sustain capacity expansion and product upgrades during industry peaks to solidify market position and enhance long-term competitiveness.