MorganstanleyRESEARCH

October8,202508:00PMGMT

GreaterChinaSemiconductors|AsiaPacific

MemoryRefresh:

UnprecedentedSupercycle

AIcontinuestopushthesupercycleforDRAM,NANDandevenNORFlash.Chinesememoryplayersremainaggressiveon

capacityexpansion.RaisePTsforNanyaTech,Phison,andSIMO.

KeyTakeaways

ExpectDDR4toface10-15%undersupplyoverthenextthreequarters,withpotentialformoresevereconstraintsonthebackend.

Anticipatea2%NANDshortagein2026duetoAIinfrastructuredeployment,withourbullcaseprojectinguptoan8%shortage.

DDR4shortagetocontinueuntil4Q26attheearliest:OurUSanalystJoeMoorerecentlyupgradedMicrontoOW

(link)

,statingthatitIsnottoolatetoparticipateinthememoryupcycle.ForDRAM,mainstreammemoryvendorshavestopped

providingpricingquotestoenterprisecustomers,whichusuallymeansmorepricingupsideahead.Wecontinuetosee10-15%undersupplyforDDR4overthenextthreequarters

(link)

,potentiallyexacerbatedbyback-endconstraints.NanyaTech

reportedpreliminary3Qrevenueof+79%Q/Q,andweexpectthismomentumtocontinuewithASPslikelytoriseatleast20%Q/Qasthemarketshiftsdecisivelyinfavorofsellers.

NANDdemandremainsdivergentbetweenAIandnon-AI:FasterAIinference

demandandgrowingHDDcapacityconstraintshaveledCSPstomorethandoubletheirNLeSSDordersfor2026.Inourbasecase,weexpectfasterAIinfrastructuredeploymenttodrivea2%NANDshortagein2026.Inourbullcase,weexpectNLSSDtofurtheroffsetNLHDDshortages,startingwitha5%NANDsupplygapin2026andpotentiallywideningto8%byyear-end.Asaresult,weexpect2026

NANDpricingtoriseatleastmid-teens%,benefitingmoduleplayerslikePhison.

NORpricingalsolookswell-supported

(link)

:NORsupplygrowthremainscappedattheback-end.WithpossibledemandupsidefromIoT(e.g.AirPods)andservers,webelievetheundersupplyratiocouldrisefromlow-single-digittomid-single-digitin1H26.AirPodsalonecouldaccountfor5-10%ofglobalNORdemandby2026aseachpairrequiresthreehigh-densityNORFlashchips.Thissuggestspricehikes

couldpersistwellinto2026.

RaisePTsforNanyaTech,PhisonandSIMO:WeexpectlegacyDRAMplayerstocontinueenjoyingpricehikesinto2026,includingNanyaTech,Winbond,and

GigaDevice,helpingtheiroverallprofitability.WestillfavorPhisonandSIMOgivenourslightlybetteroutlookforNANDmodulesandthelong-termeSSDopportunity.WeareOWonNAURA,AMEC,andACMR,mainlyonongoinglocalizationplansforChinesememoryandmaturenodeplayers.APMemoryandPSMCcouldpartly

benefitfromastrongDDR3pricehike.

MorganStanleyTaiwanLimited+

CharlieChan

EquityAnalyst

Charlie.Chan@

Idea

+88622730-1725

DanielYen,CFA

EquityAnalyst

Daniel.Yen@

+88622730-2863

MorganStanleyAsiaLimited+

DaisyDai,CFA

EquityAnalyst

Daisy.Dai@

+8522848-7310

DuanLiu

EquityAnalyst

Duan.Liu@

+8522239-7357

MorganStanleyTaiwanLimited+

TiffanyYeh

EquityAnalyst

Tiffany.Yeh@

+88627712-3032

LucasWang

ResearchAssociate

Lucas.Wang@

+88622730-2875

MorganStanleyAsiaLimited+

EthanJia

ResearchAssociate

Ethan.Jia@

+8523963-2287

GreaterChinaTechnologySemiconductors

AsiaPacific

IndustryViewAttractive

What’sChanged

NanyaTechnologyCorp.

(2408.TW)

From

To

PriceTarget

NT$90.00

NT$110.00

SiliconMotion(SIMO.O)

From

To

PriceTarget

US$88.00

US$100.00

PhisonElectronicsCorp

(8299.TWO)

From

To

PriceTarget

NT$800.00

NT$1,000.00

MorganStanleydoesandseekstodobusinesswith

companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthis

report.

+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionson

communicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.

organstanley

RESEARCH

Idea

2

MonthlyUpdates:SpecialtyDRAM(+),NAND(+)andNOR

(+)

NanyaTech,WinbondandGigaDeviceareourpreferredGreaterChinamemoryplays:Wecontinuetosee10-15%undersupplyforDDR4inthenextthreequarters

(link)

,andback-endconstraintscouldmakethisevenworse.WethusbelievethecontractpriceforsomeDDR4speccouldmorethandoublein4Q.ThevalidityofthepricingquoteforDDR4isnowturningtoevenlessthanonemonth,meaningthecontractpricecouldbeadjustedupwithinweeks.WebelievethepricinghikeisalsostrongerforDDR3,withhighdouble-digitgrowthinto4Q.

Webuiltabottom-upsupply-demandmodelinourDDR4deep-divereport:

Global

Technology:HowlongcanhigherDDR4pricinglast?(29Jul2025).

Weexpect10-15%undersupplyin4Q25-2Q26,narrowingtoasingledigitin2H26.WebelievemainstreamDRAMplayerswillfocusmoreonDDR5andHBM,providingonlytheminimumDDR4supporttokeyclientsin2026andonwards.

DebatingonDDR4pricingsustainability;weareturningmoreconstructiveoverall:Investors'largestconcernrightnowisapotentialDDR4pricingcollapseinthenext1-2quarters.WethinkthelevelofDDR4undersupplymightbeunderestimatedbythe

market.BasedonourDDR4supply/demandmodel,webelievetherewillbea10-15%undersupplyinthenext3quarters.Therearenowcontractpricinghikesformostnichememoryvendorsonamonthlybasis.Thegapmaynarrowin2H26,dependingonhowsoondemandshiftsawayfromDDR4.

MainstreamplayersunlikelytoproducemoreDDR4:ThemarketisconcernedaboutmainlySamsungandCXMTcomingbacktothemarket,orextendingtheEOLtimeline,

posttheDDR4pricinghike.WebelieveDDR5andHBMstilloffermuchbiggerTAMsandlonger-termpotential,whichsuggestsit'sunrealisticforSamsungandCXMTtosticktoDDR4.AccordingtoShawnKim,SamsungisnowfocusingmoreresourcesonHBM3eandHBM4

(link)

.DDR5willbeabout80%ofthemarketin2025,weestimate.Wealsothinkthere’sanincentiveformemoryplayerstosustainhighpricingforDDR4,givenDDR4

lossesinpastyearsandthepushforDDR5migration.

DDR4demandshrinkingbutunlikelytovanish:Inourmodel,weassumeDDR4demandfalls47%in2025and51%in2026.Themajordeclineismainlyfromsmartphones,serversandPCs.However,demandfromotherapplications(TV,networking,auto,industrial)is

likelytodeclineataslowerpace.SomeapplicationsmightevenswitchbacktoDDR3(insteadofDDR4)oncepricinghikestakeeffect(e.g.TVs).ThiscouldresultinarippleeffectofbetterDDR3pricing.MostWoWprojects(e.g.NPU)in2027arealsobasedonDDR4products.

WebelieveGreaterChinasemiconductorspecialtyDRAMplayers,includingNanyaTech,WinbondandGigaDevice,wouldbethekeybeneficiariesofanyDDR4upcycle.

organstanley

RESEARCH

Idea

Exhibit1:Quarterlysupplyanddemandsummary

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

Supply(mnGb)(LHS)Demand(mnGb)(LHS)Oversupply/(undersupply)ratio(RHS)

40%

30%

20%

10%

0%

-10%

-20%

Source:MorganStanleyResearch(E)estimates

Exhibit3:Quarterlysupplybreakdown(mnGb)

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

SamsungHynixMicronCXMTNanyaWinbondPSMCJHICC

Source:MorganStanleyResearch(E)estimates

Exhibit5:NanyaTech:DRAMproductmixandroadmap(mnGb)

600

500

400

300

200

100

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

30nm(Shrink)2Xnm1Anm1Bnm

Source:MorganStanleyResearch(E)estimates

Exhibit2:Quarterlydemandbreakdownbyproduct(mnGb)

30,000

25,000

20,000

15,000

10,000

5,000

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26eSmartphonePCServerTVOthers

Source:MorganStanleyResearch(E)estimates

Exhibit4:Quarterlyoversupply/undersupplyratiovs.NanyaandWinbondpricingQ/Qchange

40%

30%

20%

10%

0%

-10%

-20%

-30%

-40%

1Q232Q233Q234Q231Q242Q243Q244Q241Q252Q25Oversupply/(undersupply)ratioNanyapricingQ/Qchange

WinbondpricingQ/Qchange

Source:MorganStanleyResearch(E)estimates

Exhibit6:Winbond:DRAMproductmixandroadmap(mnGb)

250

200

150

100

50

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

65nm46nm38nm25nm25Snm20nm16nm

Source:MorganStanleyResearch(E)estimates

MorganStanleyResearch3

4

organstanley

RESEARCH

Idea

Exhibit7:CXMTaggressivelyexpandingcapacityforspecialtyDRAM

SpecialtyDRAMcapacity(kwpm)

300

250

200

150

100

50

0

SamsungSKHynixMicronNTCPSMCWinbondJHICCCXMTOthers2019202020212022202320242025e2026e2027e

Source:TrendForce,MorganStanleyResearchestimates,basedonourchannelchecks

Exhibit8:CXMTisthelargestspecialtyDRAMsuppliernow

100%

80%

60%

40%

20%

0%

2019202020212022202320242025e2026e2027e

SamsungSKHynixwMicronwNTCWPSMCWWinbondJHICCWCXMTOthers

Source:TrendForce,MorganStanleyResearchestimates,basedonourchannelchecks

Exhibit9:TrendForceexpectsDDR4pricingtobeup13-18%Q/Qin4Q

New

1Q24

2Q24

3Q24

4Q24

BlendedconsumerDRAMrange(Q/Q)

DDR3:up8-13%

DDR3:up3-8%

DDR3:mostlyflat

DDR3:down5-10%

DDR4:up10-15%

DDR4:up5-10%

DDR4:up3-8%

DDR4:down5-10%

BlendedconsumerDRAMmid-point(Q/Q)

DDR3:up10.5%

DDR3:up5.5%

DDR3:mostlyflat

DDR3:down7.5%

DDR4:up12.5%

DDR4:up7.5%

DDR4:up5.5%

DDR4:down7.5%

New

1Q25

2Q25

3Q25e

4Q25e

BlendedconsumerDRAMrange(Q/Q)

DDR3:down3-8%

DDR3:mostlyflat

DDR3:up50-60%

DDR3:up10-15%

DDR4:down10-15%

DDR4:up18-23%

DDR4:up85-90%

DDR4:up13-18%

BlendedconsumerDRAMmid-point(Q/Q)

DDR3:down5.5%

DDR3:mostlyflat

DDR3:up55%

DDR3:up12.5%

DDR4:down125%

DDR4:up205%

DDR4:up875%

DDR4:up155%

Source:TrendForce(e)estimates,MorganStanleyResearch

Exhibit10:MobileDRAMASPProjection

New

1Q24

2Q24

3Q24

4Q24

BlendedmobileDRAMrange(Q/Q)

up18-23%

up5-10%

mostlyflat

LPDDR4X:down13-18%

LPDDR5X:down5-10%

BlendedmobileDRAMmid-point(Q/Q)

up20.5%

up7.5%

mostlyflat

LPDDR4X:down15.5%

LPDDR5X:down7.5%

New

1Q25

2Q25

3Q25e

4Q25e

BlendedmobileDRAMrange(Q/Q)

LPDDR4X:down8-13%

LPDDR4X:up0-5%

LPDDR4X:up38-43%

LPDDR4X:up15-20%

LPDDR5X:down3-8%

LPDDR5(X):up3-8%

LPDDR5(x):up10-15%

LPDDR5(x):up8-13%

BlendedmobileDRAMmid-point(Q/Q)

LPDDR4X:down10.5%

LPDDR4X:up2.5%

LPDDR4X:up40.5%

LPDDR4X:up17.5%

LPDDR5X:down55%

LPDDR5(X):up55%

LPDDR5(X):up125%

LPDDR5(X):up105%

Source:TrendForce(e)estimates,MorganStanleyResearch

Exhibit11:PCDDR4ASPisexpectedtorise40.5%Q/Qin3Q,andkeepincreasingslightlyin4Q

New

1Q24

2Q24

3Q24

4Q24

BlendedPCDRAMrange(Q/Q)

DDR4:up15-20%

DDR4:up15-20%

DDR4:up8-13%

DDR4:down8-13%

DDR5:up15-20%

DDR5:up15-20%

DDR5:up8-13%

DDR5:down3-8%

BlendedASP:up15-20%

BlendedASP:up15-20%

BlendedASP:up8-13%

BlendedASP:down5-10%

BlendedPCDRAMmid-point(Q/Q)

DDR4:up15-20%

DDR5:up15-20%

BlendedASP:up15-20%

up7.5%

mostlyflat

LPDDR4X:down15.5%

LPDDR5X:down7.5%

New

1Q25

2Q25

3Q25e

4Q25e

BlendedPCDRAMrange(Q/Q)

DDR4:down13-18%

DDR4:up13-18%

DDR4:up38-43%

DDR4:up3-8%

DDR5:down10-15%

DDR5:up3-8%

DDR5:up3-8%

DDR5:up3-8%

BlendedASP:down10-15%

BlendedASP:up3-8%

BlendedASP:up8-13%

BlendedASP:up3-8%

BlendedPCDRAMmid-point(Q/Q)

DDR4:down15.5%

DDR4:up15.5%

DDR4:up40.5%

DDR4:up5.5%

DDR5:down12.5%

DDR5:up5.5%

DDR5:up5.5%

DDR5:up5.5%

BlendedASP:down12.5%

BlendedASP:up5.5%

BlendedASP:up5.5%

BlendedASP:up5.5%

Source:TrendForce(e)estimates,MorganStanleyResearch

MorganStanleyResearch5

organstanley

RESEARCH

Idea

Exhibit12:ServerDDR4ASPisexpectedtorise7.5%Q/Qin3Q,andkeepincreasingin4Q

New

1Q24

2Q24

3Q24

4Q24

BlendedServerDRAMrange(Q/Q)

DDR4:up~20%

DDR4:up15-20%

DDR4:up8-13%

DDR4:down8-13%

DDR5:up15-20%

DDR5:up15-20%

DDR5:up13-18%

DDR5:up3-8%

BlendedASP:up15-20%

BlendedASP:up15-20%

BlendedASP:up13-18%

BlendedASP:up0-5%

BlendedServerDRAMmid-point(Q/Q)

DDR4:up15-20%

DDR5:up15-20%

BlendedASP:up15-20%

up7.5%

mostlyflat

LPDDR4X:down15.5%

LPDDR5X:down7.5%

New

1Q25

2Q25

3Q25e

4Q25e

BlendedServerDRAMrange(Q/Q)

DDR4:down10-15%

DDR4:up18-23%

DDR4:up28-33%

DDR4:up15-20%

DDR5:down3-8%

DDR5:up3-8%

DDR5:up3-8%

DDR5:up5-10%

BlendedASP:down5-10%

BlendedASP:up3-8%

BlendedASP:up3-8%

BlendedASP:5-10%

BlendedServerDRAMmid-point(Q/Q)

DDR4:down15.5%

DDR4:up15.5%

DDR4:up30.5%

DDR4:up17.5%

DDR5:down12.5%

DDR5:up5.5%

DDR5:up5.5%

DDR5:up7.5%

BlendedASP:down12.5%

BlendedASP:up5.5%

BlendedASP:up5.5%

BlendedASP:up7.5%

Source:TrendForce(e)estimates,MorganStanleyResearch

Exhibit13:DRAMinventoryhasimprovedslighting(weeksofinventory):Smartphone,DRAMandPCOEMinventoryareshrinking

17

15

13

11

9

7

5

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

4Q23

1Q24

2Q24

3Q24

4Q24

1Q25

2Q25

2Q25

3Q25

3

DRAMsuppliersPCOEMsMajormodulehousesServerSmartphone

Source:TrendForce,MorganStanleyResearch

Exhibit14:DDR5vs.DDR416GbSpotPricingComparison(as

ofOct3):PricingdiscrepancystartedinJune,aftermajorsuppliersannouncedEOLplans

16.6

14.6

12.6

10.6

8.6

6.6

4.6

2.6

Jan24

Feb24

Mar24

Apr24

May24

Jun24

Jul24

Aug24

Sep24

Oct24

Nov24

Dec24

Jan25

Feb25

Mar25

Apr25

May25

Jun25

Jul25

Aug25

Sep25

0.6

DDR416Gb(2Gx8)3200MbpsDDR516G(2Gx8)4800/5600Mbps

Source:DRAMeXchange,MorganStanleyResearch

Exhibit15:DDR4stillenjoying42%spotpremium(asofOct3)

3.0

2.0

1.0

0.0

-1.0

-2.0

-3.0

-4.0

-5.0

-6.0

-7.0

Jan24

Feb24

Mar24

Apr24

May24

Jun24

Jul24

Aug24

Sep24

Oct24

Nov24

Dec24

Jan25

Feb25

Mar25

Apr25

May25

Jun25

Jul25

Aug25

Sep25

Oct25

80%

60%

40%

20%

0%

-20%

-40%

-60%

DDR5pricepremiumtoDDR4(LHS,$)DDR5vs.DDR4pricegap(RHS,%)

Source:DRAMeXchange,MorganStanleyResearch

6

organstanley

RESEARCH

Idea

Exhibit16:CommodityDRAMcontractvs.spotpricetrend(DDR48Gb)–spotpremiumat7%asofOct3(vs.110%spotpremiumtwomonthsago)

6.8

6.5

6.2

5.9

5.6

5.3

5.0

4.7

4.4

(US$)

4.1

3.8

3.5

3.2

2.9

2.6

2.3

2.0

1.7

1.4

1.1

Oct-19Apr-20Oct-20Apr-21Oct-21Apr-22Oct-22Apr-23Oct-23Apr-24Oct-24Apr-25Oct-25

DDR48G1G*82666MbpsSpotPrice——DDR48Gb1G*82133MbpsContractPrice

Source:DRAMeXchange,MorganStanleyResearch

Exhibit18:Consumer/specialtyDRAMcontractvs.spotprice

Exhibit17:CommodityDRAMcontractvs.spotpricetrend(DDR416Gb)–spotsurplusat10%asofOct3(vs.60%

premiumatJuly29)

14.0

12.0

10.0

(US$)

8.0

6.0

4.0

2.0

Sep-21Jan-22May-22Sep-22Jan-23May-23Sep-23Jan-24May-24Sep-24Jan-25May-25Sep-25

DDR416G2G*82666MbpsSpotPriceDDR416Gb(2Gx8)ContractPrice

Source:DRAMeXchange,MorganStanleyResearch

trend–spotsurplusat25%asofOct3(vs.1%spotpremiuminJul29)

4.0

3.5

3.0

(US$)

2.5

2.0

1.5

1.0

0.5

Oct-16Apr-17Oct-17Apr-18Oct-18Apr-19Oct-19Apr-20Oct-20Apr-21Oct-21Apr-22Oct-22Apr-23Oct-23Apr-24Oct-24Apr-25Oct-25

DDR34Gb256M*16SpotPriceDDR34Gb256M*16ContractPrice

Source:DRAMeXchange,MorganStanleyResearch

organstanley

RESEARCH

Idea

MorganStanleyResearch7

Long-termdevelopment-China'sactivedevelopmentcouldstilltooversupplyeffects

forTaiwan'sspecialtyDRAMplayersinfuture:OurindustrycheckssuggestthatCXMTmaybesettoexpandcapacityto270/290/340kwpmin2025/26/27.WenotethatwhileCXMT's

originalIPOplan

wasreportedlydelayed,amorerecent

report

suggeststhe

companyisconsideringalistinginHongKong.Toourknowledge,CXMThasnotcommentedonthesereports.

Stockimplications:

?WeareOWonWinbond:

WinbondElectronicsCorp:UnderappreciatedEarnings

Power;ReiterateTopPick(22Sep2025)

?WeareOWonGigaDevice:

GlobalTechnology:Wafer-on-WaferStackingto

EnableNextGenEdgeAI(10Jul2025)

?WeareOWonNanyaTech:

NanyaTechnologyCorp.:DDR4SuperCycleIs

Coming;UpgradetoOW(17Sep2025)

?WeremainEWonPowerchip:

GreaterChinaSemiconductor:OldMemoryCould

LastforaLongerTime(6Oct2025)

8

organstanley

RESEARCH

Idea

NANDpricestoincreasefrom4Q25;controllerplayers

seeinggreenshoots

ForNAND,whilethereissomespecmigrationinthetraditionalclient/consumerNAND

Flashmarket,overalldemandremainsrelativelylukewarm.However,acceleratingAI

inferenceworkloadsandmountingHDDcapacityconstraintshavepromptedCSPstomorethandoubletheirNLeSSDordersfor2026.Inourbasecase,weexpectfasterAI

infrastructuredeploymenttodrivea2%NANDshortagein2026.Inourbullcase,we

anticipateNLSSDsincreasinglycompensatingforNLHDDshortfalls,startingwitha5%supplygapin2026andpotentiallywideningto8%.Asaresult,weexpectfull-yearNANDpricingtoriseatleastinthemid-teens%,furtherbenefitingmoduleplayerslikePhison.

Formemorycontrollers,wecontinuetoseemajorsuppliersexpandingtheiroutsourcedratioforNANDcontrollers,particularlyintheenterprisesegment,asoverallR&D

spendingriseswiththemigrationtomoreadvancednodes.Asaresult,weexpectSIMOtobeakeybeneficiaryofthisoutsourcingtrend.

Exhibit19:NANDFlashsuppliers'respectivesupplybitgrowthrates

SupplyBitGrowth

SNMSUNG

nnicron

2025F

0.9%

7.0%

11.8%

10.3%

87.3%

2026F

10.2%

18.7%

15.6%

17.2%

37.3%

Source:TrendForce

Exhibit20:Waferspotpricingandmodulepricessawextremepricehikesin3Q25

4.0

3.5

Wafer

3.0

2.5

Module

2.0

1.5

1.0

0.5

Oct-19Apr-20Oct-20Apr-21Oct-21Apr-22Oct-22Apr-23Oct-23Apr-24Oct-24Apr-25Oct-25

256GBSSDModule(US$)TLC256GbWaferSpot(RHS;US$)

Source:ChinaFlashMarket,MorganStanleyResearch

Exhibit21:SSDpricingsawhikesin2Q25buthaveremainedstablein3Q

4.0

3.5

Wafer

3.0

2.5

Module

2.0

1.5

1.0

0.5

Oct-19Apr-20Oct-20Apr-21Oct-21Apr-22Oct-22Apr-23Oct-23Apr-24Oct-24Apr-25Oct-25

256GBSSDModule(US$)TLC256GbWaferSpot(RHS;US$)

Source:ChinaFlashMarket,MorganStanleyResearch

MorganStanleyResearch9

organstanley

RESEARCH

Idea

Exhibit22:512GBTLCwaferpricingstablein1H25butslightuptickfrommid-July

6.5

5.5

4.5

Wafer

3.5

2.5

Module

1.5

0.5

Oct-19Apr-20Oct-20Apr-21Oct-21Apr-22Oct-22Apr-23Oct-23Apr-24Oct-24Apr-25Oct-25

512GBSSDModule(US$)TLC512GbWaferSpot(RHS;US$)

Source:ChinaFlashMarket,MorganStanleyResearch

Exhibit23:

TrendForceblendedNANDflashpriceforecasts

1Q252Q253Q25e4Q25e

New

BlendedNANDflashrange(Q/Q)

BlendedNANDflashmid-point(Q/Q)

New1Q242Q243Q244Q24

BlendedNANDflashrange(Q/Q)

up23-28%

up15-20%

up5-10%

down3-8%

BlendedNANDflashmid-point(Q/Q)

25.50%

17.50%

7.50%

-5.50%

down15-20%Up3-8%up3-8%up5-10%

-17.50%5.50%5.50%7.50%

Source:e=TrendForceestimates,MorganStanleyResearch

Exhibit24:NANDinventorydropin3Q25(weeksofinventory),observedacrossNANDsuppliersandPCOEMs

27

25

23

21

19

17

15

13

11

9

7

5

3

4Q19

1Q20

2Q20

3Q20

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

4Q23

1Q24

2Q24

3Q24

4Q24

1Q25

2Q25

2Q25

3Q25

NANDsuppliersPCOEMsMajormodulehousesServerSmartphone

Source:TrendForce,MorganStanleyResearch

10

organstanley

RESEARCH

Idea

Chinamemoryplayerslooksettocontinuerobustcapacity

expansion

Basedonoursupplychainchecks,bothDRAM/HBMandNANDmemoryarecritical

componentsforAIcomputingsemiconductors.HBM3eappearstobethemainstreamspecfornext-generationdomesticHBM,positionedtosupportself-developedAIprocessors.

Withthatinmind,weexpectChineseHBMdevelopmenttoacceleratethrough2025and

2026.Inaddition,givenongoingexportcontrolsonkeysemiconductorequipmentfromtheUS,weareseeingarisingrateoflocalizationofwaferfabequipmentfornewfoundryprojectsinChina(

ChinaWFEoutlookremainsstrongin2H25and1H26

).

Exhibit25:Localequipmentadoptionratiosofdifferentkeyprojects

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

45%

27%

22%

18%

20%20%18%

15%

14%

SMIC(Lingang

fab)

HuaHong(Fab

9)

SMIC

(Jingchengfab)

Nexchip(Fab3)

Chinaoverall

WFE

Chinaoverall

WFE

localization

rate(2024)

CXMTYMTCNexchip

(Fab1&2)

localization

rate(2025e)

Source:MorganStanleyResearchestimates.

CXMT(private):AccordingtoourindustrychecksatSEMICONChina,CXMTmaybeabletoexpanditscapacityby60kwpmin2025,withanadditional20kwpmin2026.Overthelongterm,CXMT’stotalcapacitycouldexceed300kwpm.However,thecompanyis

currentlypreparingforanIPO.IftheIPOtakesplacein2026,newlyraisedfundscouldfurtheracceleratecapacityexpansion.

YMTC(private):OursupplychainchecksindicatethatYMTCissteadilyfillingFab1andFab2,andissettobegintoolmove-inforthenewFab3in3Q25.Fab3isnotexpectedtorampmeaningfullyuntil2026.We’vesplitYMTC’sadditionalcapacityinto“memory”and“peripherals,”withonlymemorycapacityreflectedinthechartbelow.Onthisbasis,ourindustrycheckssuggestYMTCcouldexpanditstotalcapacityby10kwpmin2025,withafurther40kwpmaddedin2026.

Exhibit26:PotentialforsignificantexpansionatCXMT

CXMT

2018

2019

2020

2021

2022

2023

2024

2025e

2026e

2027e

2028e

Capacity(kwpm-8"equiv)

-

45

90

113

128

275

473

608

653

765

855

12-inchfabs

20

40

50

57

122

210

270

290

340

380

HefeiPhase1(12-inch)

20

40

50

52

100

100

100

100

100

100

HefeiPhase2(12-inch)

0

0

0

0

0

50

90

100

100

100

Beijing(12-inch)

0

0

0

5

22

60

80

90

100

100

SHLingang(12-inch)

0

0

0

0

0

0

0

0

40

80

Source:TrendForce,e=MorganStanleyResearchestimates,basedonindustrychannelchecks.

organstanley

RESEARCH

Idea

MorganStanleyResearch11

Exhibit27:PotentialforcapacityexpansionatYMTC

YMTC20182019202020212022202320242025e2026e2027e2028e

Capacity(kwpm-8"equiv)-4590191236270338360450529596

12-inchfabs204085105120150160200235265

WuhanFab1(12-inch)

20

40

85

95

95

95

100100100100

WuhanFab2(12-inch)

0

0

0

10

25

55

60608585

WuhanFab3(12-inch)

0

0

0

0

0

0

0405080

Source:TrendForce,e=MorganStanleyResearchestimates,basedonindustrychannelchecks.

Stockimplications

?WeareOWonNAURA:WeexpectNAURAtodeliverfurtherearningsgrowth,

drivenbymarketsharegainsoverpeersamidChina’slocalizationpush.Webelieveitskeycustomerswillcontinueexpandingcapacityaggressivelyoverthenextfewyears.NAURAhasacquireda17.9%stakeinKingSemi,whosetrack,cleaning,andback-endequipmentcouldcomplementNAURA’sproductportfolio.Wealso

expectNAURA’sR&DandsalesteamstoempowerKingSemi’sgrowth.

?WeareOWonAMEC:WebelieveAMECcouldfurtherexpanditsmarketshareonthebackofitsleadingtechnologiesandbroadercov