Chen Peiming, general manager of Winbond, a major memory manufacturer, said that benefiting from the recovery of terminal demand, the advancement of new processes, and the structural supply and demand imbalance in the memory market due to technology iteration, Winbond's DRAM (CMS) business has reached a new high in the past three years. The company is optimistic about its long-term growth prospects in the fourth quarter (4Q) and the future. It expects that revenue, shipments (Shipment) and average selling price (ASP) will all experience greater growth and return to the normal growth track.
Chen Peiming pointed out that Winbond Electronics’ DRAM and Flash businesses grew in the third quarter compared to the second quarter. Among them, the DRAM business increased by 18% compared with the second quarter and 33% compared with the same period in 2024. This is the highest point of the DRAM business in the past three years. Although in terms of annual growth rate, DRAM's ASP is still down by about ten percentage points, the company previously announced that the lowest point of the DRAM business has passed and is currently continuing to rise. In terms of process advancement, the 20-nanometer process has become the main growth driver, and its shipments account for 37% of total deliveries. Among the 20nm product lines, DDR4 performed particularly well. Shipments doubled last quarter, and its share is expected to continue to increase in the next quarter. 20nm is Winbond’s first process to enter the DDR4 field, and it performed well.
As for Flash (NFlash/NOR Flash) business, it grew by approximately 4.2% compared with the second quarter. However, compared with the same period in 2024, it fell by 5.8%. The back-end production of the Flash business still faces challenges. Although the production bottleneck has been partially opened, it is still unable to fully meet the delivery demand. As a result, the inventory of finished products is almost exhausted, but there is still a large inventory of finished products or semi-finished products, which cannot be delivered in time. The ASP of the Flash business also showed an annual increase and decrease.
Chen Peiming pointed out that Winbond continues to be the world’s number one supplier in terms of NOR Flash. The latest F45 nanometer process is the company's most advanced process in No Flash, and may also be the most leading technology in the industry. The F45 process has the smallest die size, allowing it to enter high-demand applications that F58 could not enter in the past, such as TWS (true wireless Bluetooth headsets). TWS functions are becoming increasingly complex, and the demand for Flash density has greatly increased, even approaching the demand of a PC. The small size advantage of F45 can meet its requirements for form factor.
The demand for SLC NAND has been re-stimulated. In terms of NAND Flash, SLC is the company's key product for core storage, which is different from general data storage. As mainstream manufacturers shift their production focus to multi-level storage and lower the priority of SLC, there is a supply gap for SLC. Winbond is an important supplier of SLC. This business has grown by more than 20% annually. It is expected that the price of SLC will increase in the future. Chen Peiming also consolidated the growth momentum in the four major application fields including automobiles and industry, communications, consumer electronics, and computers. In addition, the demand for emerging applications such as Smart Home (sweeping robots, drones) is also increasingly strong. Winbond can use its combined advantages in LPDDR4 and NAND to meet this demand.
Chen Peiming emphasized that the current memory market is undergoing a structural and major change. The main structural problem lies in the conflict between DRAM technical standards and advanced manufacturing processes. When the traditional DDR3 and DDR4 standards were formulated, they did not require built-in ECC (error correcting code) function. However, when the world's top three DRAM suppliers advance their processes to 14nm, 13nm or even more precise processes, very small bit cells are prone to bad bits and must rely on ECC to compensate. Since the JEDEC standard does not support the use of ECC in DDR3/DDR4 on these advanced processes, the new factories and advanced processes of the three major manufacturers cannot go back to produce DDR3 or DDR4. In order to meet the demand for HBM (High Bandwidth Memory) and take full advantage of the new process, these major manufacturers were forced to turn to the production of DDR5 that supports ECC. This has resulted in a structural gap in DDR4 supply.
Although the current price of DDR5 is relatively low in an attempt to promote market conversion, many applications (such as old servers, PCs, or devices locked to specific SoC specifications) still require a continuous supply of DDR4. Therefore, many customers are actively seeking to sign multi-year, long-term contracts with manufacturers that can continue to supply DDR4. Winbond believes that DDR4 prices will continue to rise and this structural change will continue for a period of time, possibly even until 2027.
Finally, regarding the phenomenon of inventory increase, Chen Peiming clarified that this is mainly related to inventory revaluation related to accounting principles. In the past, because the selling price was lower than the cost, the company had to write-off the portion that was higher than the selling price. As selling prices rise, the value of inventory that was written off in the past is being written-backed, resulting in an increase in the amount of inventory on the books. The actual inventory quantity is slightly reduced. The company expects the impact of this inventory revaluation to end in the fourth quarter. At the same time, the cost of raw materials and back-end testing continues to be tight, putting pressure on the company's manufacturing costs.
Chen Peiming concluded that although geopolitical conflicts and tariffs are still ongoing factors, the company is committed to maintaining maximum supply flexibility to meet the needs of end customers. Overall, Winbond believes that AI is the biggest driver of memory demand, which is mainly reflected in the strong demand for HBM. Although there may be overinvestment in AI demand in the future, the current cycle will continue for some time, and it is not yet time to make major adjustments.