Winbond Electronics Corp (華邦電) yesterday gave an upbeat outlook for next year as strong demand for less-advanced memory chips has helped it swing into profit in five quarters, with the upcycle to persist longer than previous ones.
The firm is benefiting from a structural adjustment in memory manufacturing technology transition as the world’s top three players are allocating more capacity for high-bandwidth memory or DDR5 chips to support booming artificial intelligence (AI) demand while reducing supply of less-advanced DDR4 chips, Winbond said.
The transition has led to supply constraints of DDR4 chips and higher chip prices, along with demand for greater memory capacity to support increasingly complicated devices, including AI servers, PCs, robot vacuums, drones and wireless earbuds, the company said.
Photo: Grace Hung, Taipei Times
“We expect such a structural transition will last for a period of time. It could take one to two years,” Winbond president James Chen (陳沛銘) told an online investors’ conference. “A growing number of customers are approaching us to negotiate for long-term supply agreements. Such strong demand will not diminish overnight. Demand for 2026 is very healthy.”
In the past, a DRAM upcycle usually lasted for six to nine months before dipping into a downcycle, Chen said.
This time, the upturn would not end in just a six-to-nine-month period, as some customers have requested six-year supply agreements, he said.
Winbond expects chip prices to climb this quarter at a faster pace than the third quarter, attributed to limited capacity and demand for higher-density chips, Chen said.
He also expects significant growth in revenue and chip shipments this quarter compared with the previous quarter.
The memory industry is returning to the “right track,” Chen said.
The company’s DRAM prices rose more than 10 percent quarter-on-quarter, outgrowing flash memory chips. Shipments of DRAM and flash memory chips both increased by a single-digit percentage sequentially.
Winbond plans to invest about NT$40 billion (US$1.29 billion) to increase capacity for DRAM and flash memory by 60 percent and 20 percent respectively.
In the third quarter, the company posted a net profit of NT$2.94 billion, snapping a losing streak over the previous four quarters. The company lost NT$1.31 billion in the second quarter and NT$9 million in the third quarter last year.
Gross margin soared to 46.7 percent, from 22.7 percent in the second quarter and 29.3 percent a year earlier.
For the company’s memory business, gross margin surged to 51 percent from 12 percent in the previous quarter and 21 percent a year earlier. Winbond attributed the significant improvement to reversal of a previous chip inventory write-down.
The gross margin of its memory business is expected to be mostly unchanged this quarter, driven by higher chip prices and shipments, Chen said.
DRAM and flash memory accounted for 65 percent of the company’s total revenue last quarter, while logic chips contributed 30 percent.
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