Taiwan Nanya investing $10.7 billion in new EUV DRAM fabrication facility for AI workloads

Taiwan's Nanya Technology plans to invest up to $10.7 billion (approximately ₩15.2 trillion or NT$346.6 billion) between 2026 and 2029 to build an advanced DRAM fabrication facility equipped with extreme ultraviolet (EUV) lithography tools. The investment—the largest in Nanya's history and Taiwan's DRAM industry in roughly two decades—reflects a strategic opportunity emerging as the Big Three—Samsung Electronics, SK hynix, and Micron—concentrate on high-bandwidth memory for artificial intelligence and cutting-edge DRAM, leaving a supply gap in legacy chips such as DDR4 and DDR3. Nanya, the world's fifth-largest DRAM maker, joins China's CXMT in aggressive capacity expansion, reshaping the competitive landscape of the global memory supply chain.

The new facility, called Fab 5A and currently under construction in Taiwan, will be equipped with EUV lithography—technology that uses extremely short-wavelength light to etch microscopic circuits onto wafers, reducing line widths to produce more chips per wafer while enhancing performance and power efficiency. Nanya plans to sequentially apply 10nm-class process nodes, including 1b, 1c, 1d, and 1e, at the new fab. The 1c process is currently in trial production, while the 1d process is in final development stages. Depending on market demand, the total investment could potentially scale up to $16 billion (approximately ₩22.7 trillion).

Fab 5A is scheduled to begin wafer production in the second half of 2027, ramping to a monthly capacity of 30,000 wafers in 2028 and 35,900 wafers in 2029, with an ultimate target of 45,000 wafers per month. To support this expansion, Nanya has raised its capital expenditure budget for 2026 by 34 percent, from NT$52 billion to NT$69.7 billion, with allocations directed toward equipment down payments and research and development.

Nanya's ambitious investment is backed by stronger-than-expected earnings. As the Big Three shifted production toward high-value products like DDR5 and HBM, supply of legacy DRAM tightened while demand from industrial, server, and PC applications remained steady, driving prices sharply higher. Nanya's July revenue surged 719.6 percent year-over-year to a record NT$43.87 billion, with first-quarter revenue jumping 60 percent sequentially to $1.55 billion. The company aims to expand DDR5's share of revenue—currently only about 10 percent—and plans to begin customer qualification for LPDDR5, its latest mobile DRAM, in the second half of this year.

China's largest DRAM maker, CXMT, is pursuing similarly aggressive expansion. Through its recent initial public offering, CXMT raised approximately $9.9 billion (CNY 66.6 billion), of which roughly $1.1 billion (CNY 7.5 billion) will upgrade memory wafer production lines and approximately $1.9 billion (CNY 13 billion) will fund next-generation DRAM technology development. CXMT is also considering building a second 12-inch DRAM fab in Beijing. Once all new facilities are operational, total production capacity is expected to more than double from the current 300,000 wafers per month to over 600,000 wafers.

Market share data illustrate the shifting landscape. According to Counterpoint Research, Samsung Electronics maintained its top position with 39 percent of the global DRAM market in the second quarter, followed by SK hynix at 26 percent and Micron at 25 percent, with the Big Three collectively controlling 90 percent. However, CXMT's revenue soared 716 percent year-over-year while capturing a 7 percent market share, and Nanya's revenue surged 690 percent, similarly lifting its market share.

The rising competitive pressure is evident in price dynamics. Apple's attempt to source CXMT's LPDDR5X mobile DRAM to reduce manufacturing costs for devices such as the iPhone reportedly collapsed due to pricing disagreements. CXMT quoted prices comparable to, or even higher than, those of Samsung Electronics and SK hynix, signaling strengthened pricing power. CXMT is buoyed by demand from major Chinese tech firms, having signed supply contracts worth $3 billion (approximately ₩4.3 trillion) with Tencent and up to $7 billion (approximately ₩9.9 trillion) with ByteDance.

The shift in the artificial intelligence market from large language model training to inference is also benefiting latecomers, as memory demand broadens from HBM to general-purpose server DRAM. TrendForce reported that global DRAM revenue reached $97 billion (approximately ₩137.7 trillion) in the first quarter, an 81 percent sequential increase, and forecast that server DRAM contract prices would rise 13 to 18 percent quarter-over-quarter in the third quarter. Because HBM consumes significantly more wafers than standard DRAM, HBM's share of total DRAM wafer input is projected to rise from 22 percent this year to around 30 percent next year, likely prolonging the shortage of standard DRAM.

While Samsung Electronics and SK hynix are also expanding production of both HBM and high-capacity server DRAM, the timeline from fab construction and equipment installation to yield stabilization means the full impact of new capacity on supply is unlikely to materialize until 2027–2028 or later. As one industry source noted, "AI infrastructure investment is driving demand not only for HBM but also for high-capacity server DRAM and commodity products. Even with increased investment, it takes time for new capacity to translate into actual supply, so tight market conditions are likely to persist for the foreseeable future."

Attention is now focused on whether Nanya's Fab 5A investment will catalyze Taiwan's DRAM industry transition from legacy products to advanced process technology, and whether CXMT can leverage price competitiveness to expand its influence beyond the Chinese market. The aggressive capacity expansion by latecomers is expected to have a growing impact on global DRAM supply, demand, and pricing, even as the Big Three maintain their technological dominance.