Nanya Technology Corp Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Jeff Ohlweiler - Macquarie - Analyst : Dr. Lee. Two questions for me. Number one, how is inventory at Nanya Tech side? I guess 3 questions. Two is, as your utilization rates back to full. And 3 is, how much DDR5 shipments do you think you can get out in the fourth quarter?

Question: Jeff Ohlweiler - Macquarie - Analyst :

Question: Jeff Ohlweiler - Macquarie - Analyst : Okay. And I guess last question then I'll get back in line is, can you talk more about -- it seems like your ASP was up for the quarter Q-o-Q, but it seems like a lot of the news flow has been Chinese competitors flooding the market with some DDR3, DDR4, low-power DDR4 and price is down, but at least you're seeing your ASP. Can you talk a little bit about pricing trends in the third quarter and also into fourth quarter?

Question: Simon Woo - Bank of America - Analyst : Yes. Number one, you are feeling that the December quarter ASP for Nanya Tech still showing the quarter-on-quarter increasing trend?

Question: Simon Woo - Bank of America - Analyst : How about DDR3, sir?

Question: Simon Woo - Bank of America - Analyst : So you mean the DDR4, low-power DDR4 and then DDR3, they are showing similar pricing trend?

Question: Simon Woo - Bank of America - Analyst : Yes. But you think not easy to see the price upside further for December quarter for the...

Question: Simon Woo - Bank of America - Analyst : However, once the Nanya Tech, say a more expensive DDR5 versus DDR4, the blended ASP upside we can talk, mix improvement ASP upside. .

Question: Simon Woo - Bank of America - Analyst : Yes, yes. And then eventually, the legacy DRAM, DDR3, DDR4 will be more balanced once the big 3 DRAM makers reduce their production volume or inventory of this legacy product?

Question: Simon Woo - Bank of America - Analyst : Next few quarters and not immediately for now, right?

Question: Simon Woo - Bank of America - Analyst : Yes. And then the question is CXMT or Chinese DRAM maker, not several investors asking the impact of the China local DRAM production volume increase, but what's your views, sir? I think the -- I don't see the DDR5 product from the China local DRAM maker. But yes, I do see DDR4, but -- not sure whether their volume is really big to threat Nanya Tech because Nanya Tech still says at least 20% of our DRAM revenue is for the China local smartphone or PC consumer makers, right? So the investors question these days, China local memory makers, DDR4 production volume growing, capacity gain bigger that may affect Nanya Tech, maybe Q4 and then 2025 will recover. These are the key questions. What's your view on this, sir?

Question: Simon Woo - Bank of America - Analyst : But do you think their quality is good enough. I think the DDR4 is okay, but they never proved DDR5, LP DDR5 for the mobile phone. So do you think their quality is good enough...

Question: Simon Woo - Bank of America - Analyst : Yes, yes. So overall, no impact on Nanya because you focuses on the consumer demand...

Question: Simon Woo - Bank of America - Analyst : Because of the demand...

Question: Jay Hyun - JPMorgan - Analyst : I have 2 questions. First, allow me to ask more details about your third quarter bit shipment. How much of the third quarter shipment that 20% decline was impacted by the one-off factors versus organic demand decline from customers? And you also mentioned 15% of your wafers are now being migrated. Is it the major reasons? Could you just help us a little bit more detail to understand the 20% bit decline as it sounds quite high. And just extension to this, were there any wafer scrappage in the third quarter? And then I have one more follow-up. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 09, 2024 / 7:00AM, 2408.TW - Q3 2024 Nanya Technology Corp Earnings Call

Question: Jay Hyun - JPMorgan - Analyst : So then may I just reconfirm that there was no wafer scrap finish at all in the third quarter?

Question: Jay Hyun - JPMorgan - Analyst : So it had a profit impact as you explained during the early beginning of the presentation, but the impact to the wafer production was minimal?

Question: Jay Hyun - JPMorgan - Analyst : Understood. My next question is related to DDR5. When you negotiate with your key customers, how much price premium is Nanya Tech team generally expecting to command over DDR4 such as for the PC applications? There are market price code that we can also refer to such as like 30%, 40% premium some people talk about. But do you think this is roughly the reasonable range that we could use to assume when you actually roll out more DDR5 bit shipments starting Q1 next year? Or do you think the range could be higher? If you could give us any reasonable range or thoughts, that would be really helpful.

Question: Charles Shum - Bloomberg Intelligence - Analyst : I just have 2 questions. I just want to follow up on the sales mix of the DDR5 because previously, you mentioned that looking at the 10% sales contribution by the end of this year. So is there any update on that front? And also, what is your expectation for the sales mix for the next year? So you are saying that you're actually putting 15% of your capacity in DDR5 now. So is that the percentage we should expect in the first quarter in terms of the sales mix? And second question on -- yes, please go ahead.

Question: Charles Shum - Bloomberg Intelligence - Analyst : So is there any target for your company on the sales contribution on the DDR5 in the first quarter next year?

Question: Charles Shum - Bloomberg Intelligence - Analyst : Okay. Got it. My second question actually is related to the power. You mentioned it seems that the power outage has a big impact on your operations. We also noticed that actually Taiwan -- Taipower is going to raise the power tariff again in -- later this month. So what's your estimation on that -- about 40% power tariff increase for your company?