Nanya Technology (2408) Q1 2025 earnings summary

Executive summary

• Q1 2025 net sales were NT$7.188 billion, up 9.3% quarter-over-quarter but down 24% year-over-year, driven by increased shipments despite a decrease in ASP and ongoing technology migration costs.

• Net loss widened to NT$1.941 billion with EPS at NT$-0.63, reflecting higher costs from technology transition and product mix.

• Gross margin declined to -15% in Q1 2025, compared to -10.6% in Q4 2024 and -3% in Q1 2024, due to product mix and technology transition.

• Technology migration to self-developed 1B and second-generation 10nm-class nodes is underway, with 1/3 of wafer input expected to be 1B by Q2 2025.

• DDR5 shipments began in Q1, with 5600 speed delivered and 6400 speed sampling; DDR5 contribution to total shipments remains low but is expected to grow.

Financial highlights

• Operating loss was NT$3.155 billion, with operating margin at -43.9% in Q1 2025.

• Gross loss increased to NT$1.075 billion, with negative gross margin of 15%.

• Free cash flow was negative NT$8.432 billion in Q1 2025.

• EBITDA for Q1 was NT$797 million; non-operating income NT$732 million; income tax benefit NT$483 million.

• Cash and cash equivalents increased to NT$62.5 billion as of March 31, 2025; net cash position at NT$28.2 billion after debt.

Outlook and guidance

• Full-year bit shipment growth guidance raised to over 30% year-over-year, up from previous 20%, driven by technology migration and improved market demand.

• Q2 ASP and shipment outlook are positive, with recovery signs in DRAM pricing and demand, especially from AI and inventory reduction.

• Break-even at operating level targeted for end of Q2 or early Q3, with further improvement expected as depreciation costs decline.

• Management is evaluating the impact of new IFRS 18 standards effective January 2027.

• No earnings distribution for 2023 and 2024 due to consecutive deficits.