Taiwanese memory semiconductor company 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, outpaced by Korean corporations, but it is being reassessed as a key supplier in the global supply chain as customers have recently moved to invest equity directly amid a supply shortage. As the memory shortage driven by expanding AI demand becomes prolonged, there is an outlook that Nanya's role and influence will grow 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. While it trails Samsung Electronics and SK hynix in high-bandwidth memory (HBM) for high-performance AI, it has instead focused on commodity products and maintained its position in the market.
Its market share in the global DRAM market is about 2%. It falls well short of the three memory leaders (Samsung Electronics, SK hynix, Micron) as well as China's ChangXin Memory Technologies (CXMT) share (5%).
◇ 'Lagging' technology turns into an opportunity… investing trillions to secure volume
The turnaround for Nanya came as investment in data centers surged with the spread of AI. As generative AI services increased rapidly, demand for high-performance memory jumped, and major players such as Samsung Electronics and SK hynix began focusing on HBM production, quickly reducing DRAM supply. As a result, prices spiked 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. The technical difficulty is lower than HBM, but the demand base is broad and stable because it goes into almost all electronic devices. However, no matter how much DRAM prices rise, they cannot compare with HBM's profitability, so the major players did not restart DRAM production, widening the supply gap. Filling that gap fell to Nanya.
With this situation, cases emerged in which large sums were invested 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 such as SanDisk, Kioxia, Cisco and Solidigm.
What makes this investment noteworthy is that it is not a simple financial investment. These corporations, along with their investments, signed long-term DRAM supply contracts with Nanya. As memory demand surged with the spread of AI servers, they also made equity investments to secure the necessary volume stably. For Nanya, it effectively secured funding and, at the same time, a stable sales channel. The company expects the DRAM supply-demand imbalance to continue at least until 2028.
◇ Sales up 584% and net profit up 1,443%… also supplying Nvidia
Results also came in stronger than expected. According to Nanya's earnings announcement on Apr. 13, first-quarter revenue was 49.087 billion Taiwan dollars (about 2.1997 trillion won), a 582.9% surge from a year earlier. Operating profit was 30.11 billion Taiwan dollars (about 1.4106 trillion won), up 1,054.2%, returning to the black, and net profit rose 1,442.8%.
According to the Taipei Times, Nanya said, "Although shipments declined slightly in the first quarter, the average selling price (ASP) of DRAM rose 70% from the previous quarter," adding, "In the second quarter, it will also rise by a double-digit level compared with the first quarter."
More recently, news also emerged of supplying Nvidia. According to Taiwan's United Daily News, Nvidia last month selected Nanya as one of the suppliers of low-power memory LPDDR5X for the next-generation graphics processing unit (GPU) "Vera Rubin."
Nanya has moved to expand production facilities. This year, it will invest a total of 52 billion Taiwan dollars (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 could also consider additional production capacity expansion."
The company projected that the impact from the Iran war would be limited, as the Middle East accounts for less than 1% of sales. Even counting Europe and Africa together, it is said to be around 5% of total revenue.