ladies and gentlemen, welcome to Nanya Technology investor conference. I'm Pei-Ing Lee.

Content of my presentation to you is start with the Q2 '26 revenue and results, followed by CapEx and bit shipment, and then market outlook, conclude by business review and outlook. For Q2 '26, our net sales $82.549 billion NT dollars, compared to Q1 $49 billion or so, is up by 68.2%.

Gross profit $65.619 billion NT dollars versus $33.316 NT dollars, up by 97%. Gross margin comes to around 79.5%.

Operating income $60.826 billion NT dollars at 73.7% versus Q1 at 61.3%. Comes to net income at the, the number 69, number 79, net income comes to $50.192 billion NT dollars at net margin of 60.8%, and versus Q1 of 53.1%.

Our earning per share for Q2 $14.66 dollar, $66, $14.66 per share versus Q1 of $8.41 per share. Book value $93.49 per share versus Q1 of $62.25, okay?

That's a significant improvement from Q2 compared to Q1. Quarterly revenue result comparison: Q-to-Q, revenue up by 68.2%, and compared to Q2 last year, up by 684.2%.

For ASP, Q-to-Q increased by around 60%, and year-to-year increased by 500%. Our shipment, Q-to-Q-wise, is flat, and year-to-year comparison, increasing by high 20s.

Exchange rate is flat, and year-to-year-wise, is favorable low single digit. For the Q2 and Q1 comparison in more detail, the net sales $82.597 billion versus $49.087 billion, up by 68.2%, mostly by increasing in ASP, okay?

Our bit shipment Q-to-Q remained flat. For gross profit, $65.619 billion NT dollars at margin of 79.5% versus Q1 of $33.316 billion NT dollars at margin of 67.9%.

The gross profit increased by $32.3 billion, mainly due to higher ASP. Operating expense: $4.793 billion NT dollars versus Q1 $3.205 billion NT dollars, and the increase in operating expense is about $1.6 billion, and mostly due to employee profit sharing, and as well as the operating cost increasing, and R&D cost increase.

Operating income comes to $60.826 billion NT dollars at operating margin of 73.7% versus Q1 of $30.111 billion NT dollars, and operating income increased by $30.7 billion, mostly due to ASP increase. Net income at the bottom line here, the net income in Q2 $50.192 billion NT dollars at net margin of 60.8% compared to Q1 of $26.058 billion NT dollars at net margin 53.1%.

The net income increased by $24.1 billion NT dollars, this basically is operating income minus the income tax, unfavorable by $6.5 billion NT dollars. For operating expense on the left-hand side of the table, you see the SG&A expense at Q2 '26, it comes to $1.563 billion NT dollars, and the key reason is due to higher employee profit sharing and expanded sales activities, okay?

The right-hand side R&D expense, it's been increasing continuously to $3.23 billion NT dollars for the last quarter, and the reason behind it is also again due to higher employee profit sharing and expanded R&D activities. For cash situation, beginning of the quarter, the beginning balance is $86.281 billion NT dollars, and with cash from operating income $55.013 billion NT dollars, and then minus capital expenditure $4.046 billion, and we have significant improvement in the financial activities income of $79.509 billion NT dollars, and this is mostly due to private placement happened on Q2, okay?

The end balance for the quarter is $216.757 billion NT dollars, and with the bottom row that you may see at the bottom of this chart is that the Q2, our net cash and equivalent comes to $198.4 billion, and this takes the cash equivalent minus the long-term debt of $18.4 billion, okay? This number compared to Q1 $68.5 billion is significant improvement due to the cash from operating activity as well as the private placement injection.

For Nanya, our profitability over past 13 years is described by this chart. On the top chart is the net income, okay?

For the past 13 years, we had substantially profit for 11, and then two years of loss. This indicated that the cyclicality has been mitigated in DRAM industry, okay?

Also for accumulated profit for last 13.5 years for Nanya is $282 billion NT dollars. For net cash, it's also continual improving.

For CapEx and bit shipment, left-hand side, the CapEx, we expect to spend $52 billion for the CapEx, and first half so far is $6.9 billion, and most of the CapEx for this year will be for construction, with around 30% for capital equipment, okay? Bit shipment on the right-hand side of the chart, this year we expect for the whole year will be up by high teens, and Q2 compared to Q1 is basically flat, okay?

At this time we have very low inventory level, and for 2026, most of bit shipment is due to the inventory consumption. For financial summary and outlook, our Q2 net profit is $50.19 billion NT dollars, with EPS of $14.66 per share, and Q2 gross margin is 79.5%, net margin of 60.8%.

For the first half summary, net profit of $76.25 billion, with EPS of $23.38 per share. For Q3, we are expecting operational results continue to improve, and also operation results may be sustainable in the next few quarters.

For operation update and outlook, we have for our AI infrastructure, including the server, contribute to more than 20% of our revenue. Our new fab, first fab ramp-up is scheduled for 2028 for up to 30k wafer start per month, okay?

Total CapEx plan is $16 billion NT dollars for the full capacity of 45k for the new fab, that's including constructions. For our new development, 1c, 1d, and 1e, and EUV development is on schedule.

We will continue to provide broad product portfolio including DDR5, low power DDR5, and DDR4, low power DDR4, DDR3, and low power DDR3. We will continue to support customized AI and wafer-to-wafer products, and also AI infrastructure solutions.

For ESG recognitions, we were selected in the Dow Jones BIC World Index for the fifth consecutive year. We're also selected in Standard & Poor's Sustainability Yearbook Member for the seventh consecutive year.

For market outlook, the market-wise, the first point is AI-driven structural change is mitigating memory market cyclicality. AI and general-purpose server continue to drive strong demand in high-bandwidth memory and rest in memory, which also constrain memory supply for smartphone, PC, automotive, and consumer electronics.

The supply tightness is expected to persist over the next several quarters. Multi-years long-term agreement is aligning between supply and demand.

For the supply side, the suppliers are expanding capacity as we speak, but dynamically shifting their product mix for higher margin products. The new capacity, the greenfield capacity, aligning with multi-year LTA beyond 2028.

On the demand side, AI-driven mostly, and the evolution from GPU, CPU, TPU, and ASIC driving robust demand in HBM, low power DDR5, and DDR5. Also AI infrastructure accelerating adoption of higher content, higher performance DRAM in enterprise SSD, SmartNICs, and BMC.

For general purpose, for those non-AI-related application, favoring high-end markets, high-end product models, okay, and resulting in pricing adjustment across end markets. Overall speaking, the structural shift is intensifying memory shortage and fostering diverse AI innovation, for example, agentic AI, edge AI, and physical AI.

With that, conclude my presentation to you. Now we may move to question and answer.

Thanks management for taking my questions, and congratulations on the great results. My first question for management is what's your view on the overall pricing trend for DDR4 and DDR5 into the next few quarters?

Then I have a follow-up. Thank you.

Tiffany, I did not quite catch your question. You meant the ASP or DDR4 and DDR5 ASP?

Yes. The pricing trend for Oh,

pricing trend, okay.

Thank you. Thank you.

In general speaking, the pricing trend may continue to go higher, okay? That depends on each different sector of the market and depends on short-term agreement or long-term agreement, okay?

For long-term agreement, may becoming more and more stable. For those short-term agreement, likely the new replacement of the agreement will have some price increasing.

Got it. Is it possible to share some magnitude if possible?

Magnitude?

Yeah.

I cannot give you a very specific magnitude, okay? In general speaking, as I described to you, for those very long-term agreement, the price is relatively stable.

For those relatively short-term, the price may continue to improve in some way. The shorter one maybe improving more.

Got it. My second question is, as you just indicated that the supply demand is still quite in balance in the near term, but can you just share your view on the supply demand dynamic into 2028 or 2029 after some of our competitors or peers having more new capacity coming online?

Thank you.

Based on what we learned from the market information, the expansion that happened recently announced by several suppliers, looks like their expansion, if you basically calculate back to yearly capacity increasing, it's still within the quite reasonable range, okay? Based on current market demand situation, we are not expecting that the market will be turning other way in 2028.

All right. Thank you, Dr.

Lee, for taking my question. I'll be back to the queue.

Thank you.

Thank you, Tiffany.

Great. Thank you very much, Dr.

Lee, and congratulations on the great results. We think the key contributor to the very good second quarter result is more than 60% ASP increase quarter-on-quarter, right?

Because your volume shipment very flat. Then maybe your cost structure not much changed, right, in second quarter?

The first question, the answer is yes, okay? Our shipment is basically flat.

Then

the cost structure, also cost reduction quarter-on-quarter very limited, right?

Cost structure is very stable, yeah, mostly due to ASP change.

Yeah. Then I do remember you have some customers which ask the LTA, long-term agreement, and also some customers prepayment, but just the one quarter more than 60% ASP increase, that means still most of your business based on the monthly, quarterly price and negotiation then?

The long-term LTA also based on fair market price at the certain time, okay? Basically this is all related to market change situation.

For example, if any customer ask LTA, if the Nanya Tech agrees on this, that is mainly for the volume, right? The price should be negotiable maybe monthly, quarterly.

There are several different kind of LTA. There were

some

LTA that we fix volume and fixing price, and then we renew at the end of the period of the commitment from both side, okay? We have many of this LTA this way.

We also have LTA we discuss about a committed volume, and then we will determine the pricing according to the market trend.

Yeah. According to the market trend, you mean the more monthly basis or quarterly basis, sir, or half and half or?

Mostly quarterly-based.

Yeah. Far the Nanya Tech's great result based on the ASP increase, any color for September quarter, December quarter still you do see rising trend, price?

I think July quarter for third quarter as I described, our operational result is likely to continue to improve.

For

for Nanya's operation point of view, we think that the operating margin is is already reasonably high, okay? With the continued improvement on Q3 will be even higher, okay?

Q4-wise, it will subject to market situation change. At this moment, we don't see major major opportunity of major change for Q4 versus Q3.

Yeah. Far you don't see any impact of the Chinese local DRAM makers' revenue increase, production increase, high margin.

These guys also working for some local market listing process. You don't see any impact from the Chinese local DRAM makers?

Not directly to Nanya, okay? Our business worldwide, including our business in China, has been quite stable.

Still roughly DDR4 maybe 40-50%, DDR3 and DDR4 maybe more than 80% of the total revenue these days, DDR5 less than 20%? What's the rough idea of mix?

Currently maybe DDR4 is more percentage. DDR5 and DDR3 is about equal, okay?

20 to 20? You mean the DDR5 20%, DDR3 20%?

Maybe 10 and 10, but also low power. You talk about DDR4, if you include low power, then maybe some 70%, and then 10, 10, and the others are 10%, yeah.

DDR4 and the low power DDR4 all together more than 70% in second quarter?

Around probably 60-some near 70%. DDR4 and low power DDR4,

yeah. Yeah.

Then DDR5

Simon, this is dynamically changing a little bit according to customer requests.

Yeah. Only the DDR5 is around what, 10% range?

Yeah, 10% range, yeah.

Yeah. All clear, sir.

Yeah. Oh, one last question for some investors.

You already mentioned $45 billion spending, $16 billion spending for the 45k, including the construction costs?

Right.

Any rough idea construction costs is what, $5 billion or how

much? Construction cost by itself probably less than $3 billion, maybe $2.something billion.

The rest equipment?

The rest are equipment. That's including EUV as well.

The EUV starts from after 1e, it must be 1f technology or something?

We will start to implement EUV in 2028.

The up to 1e technology, 1e node, no need EUV?

That could be 1c, could be 1d, or could be 1e.

Oh, one of these you may use EUV?

It depends on our equipment arrangement.

I see. All clear, sir.

Thank you so much. I'm sure that the other guys want to ask questions, I'm off now, but maybe I will get back to you later.

Thank you so much, sir.

You're welcome, Simon.

Thank you.

Thanks, Dr. Lee, for taking my question again.

I'd like to ask about your development on the customized DRAM or customized AI solution part. Do you have any plans for developing HBM-like products?

Thank you.

Customized DRAM, we are working with our customers. We have multiple customers working on that, okay?

Regarding to JEDEC standard HBM, okay, we may be also working with the customer together on the project like that.

Do you have a revenue guidance for any kind of customized plus HBM products?

That's very much depends on the customer's market development, okay? I cannot give you specific guidance on that for now, but depends on which customer who may be more successful or taking longer time.

It's going to be depends on customer's projects schedule, okay? Again, we will do our best to help the success of our customer, that's our goal.

For specific target date, I don't have a specific date for you.

Got it. Does this include the wafer-on-wafer project or products that you previously shared, right?

Tiffany, your voice is a little echo. For me, I cannot hear you well.

Can you repeat?

Sorry about that. Is it clearer now?

Oh, it's better.

Sorry about that. Does this customized AI product could include all those wafer-on-wafer projects that you mentioned in previous earnings call?

Wafer-to-wafer bonding. Yes, that's all included, yeah.

All right, okay. My second question would be what's your observation and monitor on the non-AI-related product demand into second half and also into 2027?

Non-AI right now, as I say just now, is the high-end model, high-end product maybe doing better than the low-end product, okay? The whole ecosystem will go through some self-adjustment over this time.

Got it. One last follow-up for me would be what's your view on PC and smartphone shipment into 2027?

Do you expect a flat year-over-year kind of magnitude or a potential decrease on a year-over-year basis?

Tiffany, I'm sorry that I didn't quite get your question, okay? For your non-AI question that just now, I would say that Nanya will continue to support non-AI customer through our product portfolio I described just now, including DDR3, low power DDR3, DDR4, low power DDR4, even some low power DDR2 we still supporting, and also upcoming DDR5, low power DDR5 as well for the non-AI application.

All right.

Got it. Thank you.

Oh, thank you very much, Dr. Lee, again.

Let me double check long-term trend, because the most of the PC, smartphone, even server need a DDR5 or low power DDR5, but your point is, according to the second quarter results, DDR5 remained only the 10% range of the total revenue. That means DDR3, DDR4 demand remains quite good.

Would you recap why your customers really need Yeah.

Right now, Simon, is that our customer demand on DDR4, low power DDR4, or even DDR3 and DDR5 is very strong, okay? Right now the reason why we not doing more DDR5, mostly because we don't have sufficient capacity to do more, okay?

On the other hand, in the market, customer can get DDR5 supply from more suppliers, but DDR4 and low power DDR4 is more restricted. They are not able to get sufficient supply from different suppliers.

That's the reason why we spend more capacity in this area. Yeah.

Would you remind us which application still you're focusing still consumer more than 50% your revenue still, consumer applications?

In general speaking, our definition of consumer is very wide, okay? That's everything other than cloud, other than mobile, we all put it into consumer range.

That's including automotive, industrial, some communication is in the consumer, but high-end communication is in AI infrastructure.

These things all together still what, more than 60%, right?

Yeah. Then

the rest again, the PC, server, some mobile?

Right.

Got it. 1,000 range.

Yeah.

All right, sir. Then the financial questions, sir.

You have a lot of cash. Great.

Congrats. Any rough idea how you're going to return such big amount cash for shareholders or even why not your lovely colleagues, employees, or any idea?

You mean dividend?

Dividend and then some year-end special bonus like Korean memory makers or Oh,

as I described, we already planning on that and start already reserve some cash for employee bonus sharing as I described to you in our numbers, okay? That's for the employee area.

For the dividend area, we will be paying attention to distribute some dividend considering our need for future growth in equipment and CapEx. In general speaking, we will also pay back to our investor for the dividend.

Any color payout ratio? 30%, 40%, 20% or?

Maybe 40% plus minus range, okay? I cannot give you specific numbers at this moment.

You mean the 40%

plus minus

as an example out of the net profit, right?

Yes.

These net profit again from second quarter special bonus or employee incentive is already expensed, already included?

Some of the expense is included in the

second quarter,

and also first quarter too.

First quarter too,

yeah. We'll continue to reserve cash each quarter for employee bonus.

Right. Your target spending this year $50 billion NT dollar something, $52 billion, but Q1, Q2 only the $7 billion.

How you're going to spend more than $40 billion NT for CapEx? Because so far very minimal spending.

When you're going to use up the spending?

The spending is based on our payment, okay? When we do construction, we do have a schedule of review and also acceptance of those engineering work.

Only when the certain point we start to pay, okay? The construction continued move on as schedule, okay, but the payment point is not there yet, okay?

Only when we have finished all the engineering inspection and review and then acceptance criteria is met, and then we pay.

$52 billion CapEx is commitment basis rather than actual payment basis, right?

Not yet payment. Right now is only $6.9 billion $6.9 billion has been paid, and this number will increase a lot more in the upcoming quarters.

Yeah. All right, sir.

All clear. Thank you so much, sir.

Thank you.

You're quite welcome, Simon. Thank you.

Okay. Our first question is from Michael Shan, KGI Security.

Question one is DRAM is no longer just a commodity. It's becoming a strategic national asset.

Government in US and South Korea and China are using national resources to support their domestic memory company. Do you think our government recognize this?

If not, do you have a strategic to demonstrate our value and secure stronger government support? That's very good question, okay?

Yes, our government now has been recognizing the logic side development particularly from TSMC, they've been recognized very well. The memory side is an area that would require more support.

That's very true. The government structure is quite complicated, from central government to local government and individual department, etc., it's quite complicated.

I would say there are some units, okay, some government units has been very helpful for DRAM industry, very, very helpful. Some units, it's not so helpful, that's quite true, okay?

We will have to continue to work with government in different unit, try to get their appreciation on the DRAM industry. At this moment, DRAM industry is lagging behind logic industry for sure, okay?

Especially for some government we like to see if they can come up with special office, a special support, unified support instead of we have to go through one department after another department, have to go through 10 department to get one one thing done, okay? That's going to be needed for future growth in DRAM industry, and we will continue to work on that.

Your second question is whether in standard HBM in wafer-to-wafer, the role of logic base die is becoming increasingly important? Yes, that's very true.

Given that leading foundry is also a Taiwanese company, could you share how this help strengthen the competitiveness of your wafer-to-wafer products? It really helps to streamline our customized project, okay?

We have several of those projects going on, okay? That helps, okay?

The next question coming from Capital Security from Dean Chang. Mr.

Chang's first question is to prevent LTA defaults during downturn, would you consider signing LTAs with stricter terms, such as take-or-pay, such as price floor and ceiling, and/or cash prepayment? Yes, that's very very good suggestion, and we will consider that.

The next question from [E.SUN?] Investment Consulting by Ethan Hsu.

Mr. Hsu's first question is recently GigaDevice caution that memory industry is cyclical in nature, and how does the company assess the current industry outlook and this potential risk?

Yes, I think DRAM industry is cyclical, especially in those low-ticket item as I mentioned. At this moment, mostly is non-AI-related low-ticket item, okay?

That's very true, and that ecosystem may need some Tougher now for now, okay? May need some help, okay?

Overall speaking, the market situation remains in supply shortage, okay? Currently even with that small ticket item ecosystem problem and tougher business for them, it's still not impacting the overall market shortage situation.

Question two is that there has been market report indicating that Nanya LPDDR products supported by TSMC technology has successfully been designed into memory supply chain of NVIDIA's next-generation AI platform, Vera Rubin. Could management provide any additional comment or update regarding to this report?

I must say that this related to customer's confidentiality, and Nanya has to respect our customer's trade secret and confidentiality. I cannot go through too much detail on that.

Next question come from Huanan Security by Yi-Hua Lu. Mr.

Lu had two questions. His first question is what will recent wafer price hike impact your gross margin?

For Q2, ASP hike is the most reason our gross margin been improved, and likely this improvement may also happen in Q3. Second question is are you seeing better pull-in momentum after earlier consumer price resistance?

This in general is supply remained tighter, and it's very difficult to support double booking requirement from customer, okay? Far, yes, all the customer would like to have more support, but at this moment, the supply shortage is there.

It's difficult to support pull-in momentum. This is the end question from the internet.

Thank you. Bye-bye.