Taiwan memory chipmaker Nanya Technology (hereafter Nanya) is rapidly raising its profile amid the spread of artificial intelligence (AI). Nanya had been a mid-tier DRAM maker with a weak presence, crowded out by Korean corporations, but it is now being reassessed as a key supplier in the global supply chain as customers move to invest equity directly amid a supply shortage. As memory shortages driven by expanding AI demand persist, there are projections that Nanya's role and influence will grow even further.
According to local media reports on the 30th, Nanya is a mid-sized company that produces commodity DRAM used in servers, PCs and smartphones. It was founded in Taiwan in 1995. It trails Samsung Electronics and SK hynix in high-bandwidth memory (HBM) used for high-performance AI, but it has maintained its position in the market by focusing on commodity products instead.
Its share in the global DRAM market is about 2%. It falls well short not only of the big three memory makers (Samsung Electronics, SK hynix, Micron) but also of China's ChangXin Memory Technologies (CXMT), which has a 5% share.
◇ 'Lagging' technology turns into an opportunity… investing trillions to secure volume
The turnaround for Nanya came as AI proliferation spurred a surge in data center investment. As generative AI services rapidly increased, demand for high-performance memory surged, and major players such as Samsung Electronics and SK hynix began focusing on HBM production, causing DRAM supply to shrink quickly. As a result, prices soared starting around the second half of last year.
Nanya seized this niche. If HBM is high-performance memory specialized for AI computation, commodity DRAM such as DDR4 and DDR5 is the basic memory used in servers, PCs, smartphones and cars. While the technical difficulty is lower than HBM, the demand base is broad and stable because it goes into nearly all electronic devices. However, no matter how much DRAM prices rise, they cannot compare with HBM's profitability, so major companies did not resume DRAM production and widened the supply gap. Filling that gap fell to Nanya.
As this happened, there were cases of investing large sums on the premise of securing volume. According to Reuters, in Mar., Nanya announced a plan to issue new shares worth $2.5 billion (about 2.711 trillion won) to major global NAND players including SanDisk, Kioxia, Cisco and Solidigm.
The reason this investment is drawing attention is that it is not a simple financial investment. These corporations signed long-term DRAM supply contracts with Nanya along with their investments. As memory demand surged with the spread of AI servers, they coupled equity investments to secure the necessary volume stably. For Nanya, it effectively secured funding and, at the same time, stable sales channels. The company expects the DRAM supply-demand imbalance to continue at least through 2028.
◇ Sales up 584% and net profit up 1,443%… supplying Nvidia as well
Results also came in stronger than expected. According to Nanya's earnings release on Apr. 13, first-quarter revenue was NT$49.087 billion (about 2.1997 trillion won), up 582.9% from a year earlier. Operating profit rose 1,054.2% to NT$30.11 billion (about 1.4106 trillion won), swinging to a profit, and net profit increased 1,442.8%.
According to the Taipei Times, Nanya said, "Even though first-quarter shipments declined slightly, the average selling price (ASP) of DRAM rose 70% from the previous quarter," adding, "It will also rise by double digits in the second quarter compared with the first."
More recently, news emerged that it will supply Nvidia. According to Taiwan's United Daily News, Nvidia last month selected Nanya as one of the suppliers of LPDDR5X low-power memory for its next-generation graphics processing unit (GPU) "Vera Rubin."
Nanya has moved to expand production facilities. This year it will invest a total of NT$52 billion (about 2.433 trillion won) to build a new plant in the Taisan area of New Taipei City and will produce DDR5, DDR4 and low-power DDR4 memory using a second-generation 10-nanometer-class process. It can produce up to 45,000 wafers per month. The company said, "If demand continues to increase, we can also consider additional expansions of production facilities."
The company projected limited impact from the Iran war, as the Middle East accounts for less than 1% of revenue. Even combined with Europe and Africa, it is said to be around 5% of total sales.