Nanya Technology's earnings call releases positive news: Q4 profits reach a record high, capital expenditures increase to 50 billion! After today's stock price surge hitting the limit-up, what will happen next?

Memory giant Nanya Technology Corporation (2408) held an online earnings conference today (19th), announcing its financial report for the fourth quarter of 2025 and providing an operational outlook for 2026. Benefiting from the AI wave driving server demand, as well as strong price increases for DDR4 and DDR5, Nanya Technology achieved record profits in the fourth quarter of last year, with a quarterly EPS reaching NT$ 3.58, successfully turning around from losses for the entire year. Regarding 2026, General Manager Li Peiying expressed strong confidence, announcing that capital expenditures will explosively grow from last year's NT$ 13.4 billion to NT$ 50 billion, fully accelerating the construction of a 10-nanometer new factory. The company demonstrated strong operational recovery momentum in the fourth quarter of 2025, with various financial indicators showing that the DRAM industry has officially exited the inventory destocking cycle and entered a profit expansion period. The consolidated revenue for the quarter reached NT$ 30.094 billion, a quarter-on-quarter increase of 60.3%; the net profit attributable to the parent company after tax was NT$ 11.083 billion, with a quarterly EPS of NT$ 3.58, which not only grew more than six times compared to the previous quarter but also set a new quarterly high in nearly 20 quarters. In terms of profit structure, the gross margin performed outstandingly, jumping significantly from 18.5% in the previous quarter to 49.0%. This remarkable growth was mainly attributed to two core driving forces: first, the supply-side capacity shift to HBM, which drove the average selling price of traditional DRAM to increase by over 30% quarter-on-quarter; second, the increase in DDR5 penetration and optimization of high-end product mix further strengthened marginal contributions. Looking at the overall operational performance for the entire year of 2025, Nanya Technology's cumulative consolidated revenue was NT$ 66.587 billion, with an annual EPS of NT$ 2.13, officially ending two consecutive years of annual losses. General Manager Li Peiying pointed out that the DRAM market in 2026 will continue to experience structural supply-demand imbalances. This is mainly due to the dual effects of supply-side capacity shifts and demand-side bit consumption expansion. Demand side: The AI effect is spreading from the cloud to the edge. The continuous absorption of high-end capacity by AI servers has resulted in a normalized shortage of DDR5 and new memory specifications. In addition, the end market is experiencing a hardware specification upgrade wave, with significant increases in single-device capacities for AI PCs and generative AI smartphones, combined with a robust recovery in consumer electronics applications, supporting strong overall bit demand growth. Supply side: HBM capacity crowding out and advanced process shifts. The key variable on the supply side is that the three major global manufacturers (Samsung, SK Hynix, Micron) are strategically shifting a large amount of capacity towards high-bandwidth memory (HBM) production. Due to HBM's consumption ratio being higher than that of standard DRAM (about 2 to 3 times), this capacity crowding effect has led to a cliff-like restriction in the supply of traditional DRAM, making it difficult to support existing market demand. Price trend: In terms of pricing trends, Nanya Technology expects that DRAM contract prices will maintain an upward trend in the first quarter of 2026. Although the quarter-on-quarter increase may be difficult to replicate the extreme slope of the fourth quarter of 2025 due to the elevated base period, the upward channel remains clear due to low buyer inventory levels and suppliers' firm stance on controlling shipments It is worth noting that due to a structural supply gap, the pricing resilience and upward momentum of DDR4 are expected to lead within a specific range. In addition, Nanya Technology officially announced at this earnings conference that it will raise its capital expenditure for 2026 to NT$50 billion, a significant expansion of 2.7 times compared to the previous year. This aggressive investment strategy demonstrates the company's strategic determination to shift from stable operations to accelerating technological upgrades after improving its profit structure. In terms of capital allocation logic, the company adopts an infrastructure-first allocation model, investing 70% of the total budget into the construction of the facility systems and high-spec cleanroom projects at the Taishan new plant, while the remaining 30% will be used for the procurement and installation of key production equipment. According to the operational schedule, the Taishan new plant is expected to start equipment installation in the first quarter of 2027 and achieve mass production targets by the end of the first half of that year. It is anticipated that by the first half of 2028, the monthly wafer production volume will increase to 20,000 wafers, and the process technology will directly advance to the 10-nanometer third-generation (1C) and fourth-generation (1D) nodes to optimize bit yield and product energy efficiency. Regarding the advanced layout of the product portfolio, Nanya Technology has successfully completed the technical verification of the 128GB DDR5 RDIMM and is actively engaged in customized AI project development. This move marks the company's acceleration in bridging the technological gap with the three major global original manufacturers (Tier 1) in the AI infrastructure supply chain, striving to secure a key competitive position in the high-value memory market. What will Nanya Technology's stock price be in the future? Analysts: Pay attention to the potential profit pressure from high depreciation expenses in the next two years. Before the earnings conference, Nanya Technology's stock price had already "warmed up." Last Friday (16th), the stock closed at NT$250, up 5.26%, indicating that the market had reacted in advance to the positive news of turning losses into profits. Today, the stock opened with a gap up and quickly hit the upper limit of NT$275.0, setting a new historical high. However, the stock price trend after the earnings conference will depend on the following two major factors: Selling pressure after profit-taking: Since Nanya Technology is currently listed as a disposal stock (until January 22), buying momentum is limited. Some short-term funds may take profits at high levels after confirming the positive news from the earnings conference, and the stock price may fluctuate in a high range in the short term. Revaluation: Recently, U.S. foreign capital has raised the target prices for Taiwanese memory stocks across the board. Based on the estimated EPS for 2026 and a gross margin of up to 49%, there is room for further adjustment of Nanya Technology's PB ratio. Although there is short-term pressure for a pullback due to the disposal period and significant price increase, supported by the fundamentals of continued price increases in the first quarter and rising DDR5 penetration rates, the long-term trend of Nanya Technology's stock price remains optimistic. It is important to note that although prices are currently rising, Nanya Technology's substantial expenditure of NT$50 billion will lead to significant depreciation expenses. The operating profit in the next two years must remain high to support this scale of investment plan