Memory giant Winbond recently announced impressive third-quarter financial results, which significantly exceeded the consensus expectations of foreign investors and the market. According to the latest research report issued by the foreign-invested JPMorgan, given that Winbond is benefiting from the strong memory cycle and has deep confidence in future production capacity expansion, Winbond maintains its "overweight" investment rating and raises the target price to 70 yuan from the original 65 yuan.
Winbond's third-quarter financial report showed that EPS reached NT$0.65, which was higher than Morgan Stanley's expectations. Revenue amounted to NT$21.8 billion, an increase of 4% from the second quarter and an increase of 2% from the same period in 2024. The gross profit margin performance was impressive at 46.7%, a jump of 24 percentage points from the previous quarter, which was 5.4 percentage points better than Xiaomo’s previous expectation. Memory revenue increased 10% from the second quarter and 9% from the same period in 2024, with gross profit margin as high as 50.8%. Among them, DRAM revenue increased by 18% from the second quarter and 33% from the same period in 2024. DDR4 revenue more than doubled in the third quarter.
Looking ahead to the near future, Winbond expects revenue growth to accelerate in the fourth quarter, with EPS expected to reach 0.76 yuan, an increase of 16% from the third quarter. The company expects its conventional memory portfolio, including DDR3, DDR4, SLC NAND and NOR, to benefit from the strong memory cycle and enjoy price increases in the coming quarters.
The report pointed out that Winbond has a positive view on its medium-term prospects. The company expects DDR4 and DDR3 contract prices to continue to rise until 2026, mainly due to the structural supply gap caused by the withdrawal of the three major manufacturers. As a result, the period of strong pricing for conventional DRAM is expected to exceed the historical 6-9 month cycle. In addition, the magnitude and length of price increases for Flash products (SLC NAND and NOR) were also higher than previously expected.
In order to meet customer demand for consumer DDR4, which is in short supply, Winbond is executing DRAM capacity upgrade and expansion at its Kaohsiung plant, mainly focusing on the 16nm process. The company shows high confidence and plans to increase DRAM 16nm production starting in the first half of 2026 and load new DRAM production capacity in the second half of 2026.
In addition, Winbond announced capital expenditures from 2026 to 2027, including approximately 35 billion yuan in DRAM. DRAM capital expenditures will be used to upgrade existing 15,000 wafers per month capacity (converting 25/20nm to 16nm) and add 10,000-12,000 wafers per month at the Kaohsiung fab. The company expects that as these upgrades and expansions are completed, mostly to 16nm, DRAM bit shipments will double from current levels, with all capacity supported by strong customer demand forecasts.
Xiaomo pointed out that based on strong product pricing and capacity expansion plans, it has significantly increased Winbond's profit forecast. Among them, the estimated EPS in 2026 was raised by 11% to 4.47 yuan, which is 60% higher than the market consensus. Therefore, the investment rating of Winbond is maintained at "overweight" and the target price is raised to 70 yuan from the original 65 yuan.