Nanya plans $6.2 billion capex in 2027 as AI fuels memory demand

Taiwanese memory chipmaker Nanya Technology plans to quadruple capital spending to T$200 billion ($6.2 billion) in 2027, riding an AI boom that has pushed its gross margin from negative to nearly 80%.

"The structural changes driven by artificial intelligence are supporting a stronger long-term outlook for the memory industry," President Pei-Ing Lee told an online press briefing, adding that the current supply shortage is expected to persist for several more quarters.

Nanya reported unaudited second-quarter revenue of T$82.55 billion, up 684% from a year earlier, while net income surged 1,324% to T$50.19 billion. Gross margin improved to 79.5% from negative 20.6% a year ago. The company expects to spend more than T$50 billion this year, with total investment in the new plant reaching about T$480 billion at full capacity.

The expansion underscores the massive capital intensity required in the AI chip supply chain, where memory makers are racing to secure capacity. Nanya's customers include Nvidia, Qualcomm and Google — three of the biggest beneficiaries of the AI infrastructure buildout. Rivals Samsung Electronics and SK Hynix are also ramping up investment, with South Korea last week unveiling a $576 billion chip investment program anchored by the two companies.

Memory Makers in a Spending Race

The first phase of Nanya's new plant is scheduled to reach capacity of 30,000 wafers per month in 2028, eventually expanding to 45,000 wafers per month. The company's market value stands at about $47 billion, reflecting investor confidence in the AI-driven memory super-cycle.

Global memory makers are locked in a capital-intensive arms race to meet surging demand for high-bandwidth memory (HBM) chips — the specialized processors that handle the massive data throughput required by AI training and inference systems. SK Hynix, the dominant supplier of HBM to Nvidia, this week launched a $28 billion US share sale to fund chip factories in South Korea and purchase chipmaking equipment including extreme ultraviolet scanners from Dutch supplier ASML.

Samsung, the world's largest memory chipmaker by sales, last week projected a 19-fold increase in quarterly operating profit to 89.4 trillion won ($59 billion), though its shares fell as investors questioned whether the cycle has peaked. The volatility has been extreme: the Roundhill Memory ETF, which tracks DRAM manufacturers including Nanya, Samsung and SK Hynix, swung from above $80 to below $60 in recent weeks.

Investment Implications

Nanya's spending plans signal confidence that the memory shortage will extend well beyond the current cycle. The company's Q2 gross margin of 79.5 percent — a dramatic swing from negative territory a year ago — illustrates how pricing power has shifted to suppliers as hyperscalers compete for limited chip supply. Apple's recent price increases across many devices, attributed to higher memory costs, suggest the pricing environment will remain favorable for producers.

Nanya trades at roughly 20 times trailing earnings, a discount to US rival Micron Technology, which has seen its shares surge more than 1,500 percent over the past three years. Micron's data center segment alone now has an annual revenue run rate of $100 billion, according to management. The valuation gap between Asian and US memory makers may narrow as global investors gain easier access to Korean and Taiwanese chip stocks through new listings and ADR programs.

This article is for informational purposes only and does not constitute investment advice.