Welcome to Nanya Technology 2025 Third Quarter Earnings Conference Call. All lines are in a listen-only mode. The conference will be held only in English for the investors around the world. Today's conference will be approximately 16 minutes. Nanya Technology President Dr. Pei-Ing Lee will summarize our operations in the third quarter of 2025 followed by our guidance for next quarter and key messages.
The Nanya Technology Executive Vice President Dr. Lin-Chin Su, Vice President Mr. Joseph Wu and Financial Executive Philip Tsao will join us as we open our question and answer sessions. Today's presentation materials are available for download at Nanya Technology website at www.nanya.com. As usual, we would like to remind everyone that today's discussions may contain forward-looking statements that are subject to significant risks and uncertainties which could cause actual results to differ materially from those contained in the forward-looking statement.
Please refer to the Safe Harbor notice that appears in our presentation slides. I will now turn the call over to Nanya Technology President Dr. Pei-Ing Lee for the summary of operations and current quarter guidance. Dr. Lee, please begin.
Ladies and gentlemen, welcome to Nanya Technology Q3 2025 investor conference. I'm Pei-Ing Lee. Today I'd like to present to you first Q3 2025 Revenue and result followed by CapEx and Bit Shipment and then by Market Outlook concluded by Business review and outlook. First, for our Q3 results, our net sales our revenue comes to TWD 18.779 billion versus Q2 TWD 10.526 billion is Q/Q improvement of 78.4% and year to year improvement of 130.9%.
Our gross profit comes to TWD 3.465 billion versus loss of TWD 2.165 billion NTD in Q2 and operating income TWD 1.119 billion versus loss of TWD 4.5 billion in Q2. Our EBITDA c omes to TWD 4.731 billion versus minus TWD 743 million. Non-operating income comes to TWD 904 million versus minus TWD 599 million. This is mostly due to in Q2 that we had exchange rate impact of unfavorable of TWD 1.1 billion.
In Q2, income tax benefit TWD 460 million. Expense and net income comes to TWD 1.563 billion versus Q2 of loss of TWD 4.102 billion, and our earnings per share are positive. TWD 0.5 per share versus in Q2 minus TWD 1.3 per share, TWD 1.32 per share, and book value per share come back to TWD 50.78 per share versus in Q2 of TWD 49.91 per share. Next. Our quarter revenue result comparison: revenue Q2Q up by 78.4% versus year to year are up by 130.9%.
ASP increase in 40s and shipment increase in mid-20s. The exchange rate is unfavorable in mid-single-digit Q2Q for year-to-year, our ASP increased by mid-teens and shipments. Increased by more than double, and exchange rate unfavorable high single digit. For a little bit detailed result comparison and remark for Q2 and Q3.
Revenue-wise, Q3 comes to TWD 18.779 billion versus Q2 of TWD 10.526 billion. This is mainly due to ASP increased by 40%. Bit shipment increased by mid-twenties and exchange rate unfavorable by mid-single-digit. The gross profit TWD 3.465 billion NTD with margin 18.5% versus Q2 of loss TWD 2.165 billion with loss of minus 20.6%. The gross profit increased by TWD 5.63 billion mainly due to higher ASP and higher bit shipment.
Operating expense TWD 2.346 billion is about same as Q2, almost flat percentage wise because net sales is greatly improved in Q3. Therefore percentage for operating expense comes down by 9.7%. For operating income $1.119 billion NTD with margin of 6% versus Q2 loss of $4.5 billion NTD of minus 42.8% and operating income increased by $5.62 billion NTD. Net income comes to $1.563 billion NTD a margin of 8.3% versus Q2 loss of $4.102 billion.
And the reason behind is the net income increased by TWD 5.67 billion with exchange rate Q2Q favorable by TWD 1.46 billion. Income tax unfavorable about the same number of TWD 1.46 billion. For our operating expenses, our SG&A expenses TWD 674 million, which is in the normal range, and our R&D expense comes to TWD 1.672 billion, also in normal range. Our cash flow for beginning balance for Q3 TWD 52.572 billion and end balance at almost same at TWD 56.202 billion. Among them the cash from operating income. Basically this is positive from the profit and equipment depreciation is TWD 5.722 billion and CapEx TWD 1.878 billion and financial activity and others is minus TWD 4.213 billion. This is mostly due to we had debt repayment of TWD 5.4 billion in Q3.
As a result our free cash flow has become positive compared to Q2. Free cash flow is TWD 3.843 billion versus Q2 or minus TWD 3.716 billion and the remark saying at the bottom in Q3 we have a debt repayment of TWD 5.4 billion. Unfavorable exchange rate on cash and cash equivalent is. Minus $0.9 billion, NTD favorable. I'm sorry, and from the net cash point of view, this is net cash is our cash equivalent minus our debt short term and long term. At the end of Q3, we have a net cash of TWD 24.1 billion versus Q2 19.1.
So this shows a positive o utcome for Q3. On the right-hand side of the chart, the cash flow beginning balance $52.572 billion NTD and with cash from operating income and minus the capital expenditure and debt repayment so the end balance $52.202 billion NTD. For the CapEx and Bit Shipment. Our CapEx u p to Q3 is TWD 11.2 billion with the target.
That we would be spending up to TWD 16 billion for the year even though the original annual approval is TWD 19.2 billion. The procurement on the right hand side likely to be up by near 50%. This is adjustment up from 40% in the last quarter. Then followed by market outlook. First of all, from the outlook point of view, we see that robust AI demand and a constrained non-AI supply fuel the demand upcycle.
And the second point for the outlook is AI and general cloud server expected to drive driven demand growth in 2026, and we also seeing AI adoption is expanding to non-cloud solutions. That's, for example, Edge solution and customer. For the supply side, major suppliers reduce DDR4 and Low Power DDR4 supplies and shift their capacity to HBM, DDR5, and Low Power DDR5. And the DRAM CapEx mostly focus on advanced processes, process, and premium products, and we also seen that inventory level at a manufacturer remains healthy and demand side.
For server, AI, and high-performance computing continue to drive HBM and DDR5 demand for PC and mobile. New launches increased DDR5 and LPDDR5 content and also AI applications for consumers. We're seeing growing demand in DDR4, low-power DDR4 from consumer applications. For Nanya Business Review and Outlook, please. First of all, in summary, our Q3 turned profitable and our gross margin 18.5%, net margin 8.3% with EPS $0.5 per share and we see opportunity for Q4.
Positive outlook and also future quarters beyond. Nanya has increased our DDR4 and Low Power DDR4 shipment to address customer demand. On the fourth point here, our second-generation 10-nanometer 16-gigabit DDR5-5600 shipment requirements reaches 10%. And our DDR5 6400 meets design spec, and our third-generation and fourth-generation 10 nanometer Paladin proceed as our plan. Development for 3DIC, TSV, DDP technology and customized technology HBM is on track. With that conclude my presentation. Now we may move to Q and A section.
Yes, thank you, Dr. Lee. Before we begin the Q&A session, I would like to remind everyone to limit your questions to two at a time to allow all participants an opportunity to ask questions. We'll begin taking questions from dial-ins for webcast participants.
Please message your questions with your name and company name to Nanya operator in chat box now. For dialing participants, please press Star one on your keypad if you would like to ask questions. To cancel your question, please press Star two.
And as a reminder, it is greatly appreciated that you turned off speakerphone mode of your device to prevent possible echo effect. We thank you for your cooperation. Now please press star one on your keypad if you would like to ask questions. Thank you.
If you would like to ask questions, please press Star one on your keypad. Thank you. We are now in question and answer session. If you would like to ask a question, please press Star one on your keypad. Thank you. Our first question will be coming from Nicolas Gaudois, UBS. Go ahead, please.
Yes, hi, good afternoon. Thank you for taking my question. First one would be on DDR4. Supply and demand. Maybe if you could zoom in a little bit about how do you see incremental requirements or the current requirements from customers?
I mean we all aware that on the DDR5 side seen a significant step up from hyperscale customers requests. But how about DDR4? How is it translating in incremental demand by segment and how do you look at the supply side? Obviously not just yourself but what your peers are doing. And then I have a follow up. Thank you.
Okay Nicolas, thank you for your question. Your question regarding to DDR4 supply and demand. DDR4, b ased on the big surprise announcement on the reduction of their supply on the Q2 this year and, as a result, the supply in DDR4 market is in some shortage and DDR4 still exists in the market in the PC sector, in some of the server sector as well as in the consumer sector, and on top of that low power DDR4 is also a topic and is also still somehow exist in the mobile sector and DDR4 in a PC sector likely to reduce the demand sooner than the other sector and that's already ongoing. The PC sector likely to move to DDR5.
In a higher pace and for the cloud area, it will be moving more into DDR5. Cloud area already mostly DDR5 market, only with some. Smaller quantity in DDR4 and that area likely to be also moving into DDR5 gradually. Probably not as speedy as the PC area. On the consumer side though, DDR4 and LPDDR4 will continue to play a major role.
For the reason that the DDR4 has an existing 8 gigabit supply and DDR5 the minimum density is 16 gigabit and for DDR3 the maximum density is 4 gigabit. So still that 8 gigabit is needed in the consumer market likely to be longer duration for consumer market. From a supply side point of view, even though there are announcement of the end of life but still. Most of the suppliers still keep to some extent DDR4 and low power DDR4 supply to meet their customer demand. And, however, because of the reduction in the supply.
Move production capacity to more advanced node or to higher margin product. For those movement of the production capacity is unlikely to be moving back to DDR4 in supply. So, over time, will rely on the reduction on the demand to meet the demand-supply balance.
Got you. So I guess what you're implying for your peers is there is demand for them to do more DDR4 due to the shortage, but the demand of DDR5 for them and obviously HBM is strong enough and actually. Not really in a position to do that. Did they understand you correctly?
For the DDR5, o verall capacity actually i s consumed a lot by the HBM because HBM require more capacity to build. That takes away both DDR5 and DDR4 capacity. Okay, so that's the outcome of most of the CapEx is now more focused on HBM and DDR5.
Great, thank you. And as a follow up. You give us a CapEx guidance for this year TWD 16 billion. Any initial thoughts on 20? In a context where it's fair to say all over the DRAM suppliers looks set to increase CapEx and in fact equipment spending quite meaningfully. Thank you.
From Nanya point of view, our CapEx for next year likely will be s taying low for the reason that our new Fab capacity, a new building, won't be ready until s ometime in 2027. Okay. And for now o ur output, our shipment increase will have to rely on our manufacturing efficiency improvement, year improvement, all those marginal improvement i n our capacity. Do I answer your question, Nick?
Yes. Thank you very much. I'll go back in a queue, may have a couple of hours. Thank you.
Thank you, Mr. Gaudois. Next one. Charlie Chan, Morgan Stanley. Go ahead, please, Charlie.
Thank you. And Dr. Lee, congratulations for very good results. So first of all I'm wondering about your total shipment output limit because your Fab is running at full utilization. I'm not sure about your inventory level. So from here how should we model your bit shipments in the coming quarters or 2026 as a full year.
In the coming quarter, in Q4, likely we are targeting shipment. To be about same as our September shipment. Likely, so, could we only slight improvement Q2Q.
Yeah, so. Oh, good, right. We appreciate the coming upcycle but I just want to make sure: is the revenue upside for the coming quarters or year only coming from ASP increase or product mix improvements meaning your bit shipment outputs already hit the ceiling until you extend the next-gen stack?
Yeah, I would say majority likely from the ASP but still some from the shipment increase but not as high the percentage compared to ASP.
I see. And in that case what kind of the ASP increase in the coming quarters? And also d o you think this kind of DDR4 shortage will last entire 2026?
DDR4 shortage likely to prolong for some quarters. Okay. And until that some of the demand go away in PC for example and then the DDR4 likely to be s tay pretty strong demand in the consumer side. Okay.
So that's the DDR4 situation. And from the pricing question that you asked, that pricing coming from all different sectors. Okay. That's including DDR4, DDR5, DDR3, low power DDR4 and Low Power DDR3 etc. Okay, so these are likely that some product portfolio will be reaching.
Pretty good ASP already. Therefore their pricing outlook, their pricing increasing may be coming down a little bit. However still there are some other products making up their pricing as well.
Got you. Thank you. Yeah, and I totally agree with you that the strength in AI servers, storage, et cetera will continue consumer DDR5 so which will help with the DDR4 upcycle last longer. My second question is a little bit longer term is your Wafer-on-Wafer.
Offering for the future AGI computing. So can you share with us about your technology offering, your customers designing? Yeah, because your industry peers seems to be very vocal wafer-on-wafer. But you are the kind of the industry leader in the niche memory. So I wanted to see if management are willing to share more information about your wafer-on-wafer b usiness developments.
On wafer development. Right now, as I explained, the wafer-on-wafer is all premium. We had just installed our f ull line of production equipment. Before that we are preparing our process with vendor assistance. So we do have s ome knowledge, some data available within the company, and SR equipment becoming more r eady for operation, we'll gradually introduce that and qualify that. And that's our wafer-to-wafer status.
And the i mportant point is that why we're doing wafer-to-wafer bonding or doing chip-to-chip bonding, that HBM doing most importantly is to gain more bandwidth as well as gain more density. Okay, important. Both are important. Okay, so for Nanya, we are currently preparing our second-generation 10-nm product for the 1C.
High bandwidth and then also preparing the third generation as well as we speak. Okay. So that requires high density single die and then plus the wafer bonding or chip-to-chip bonding to make it higher density to engage in the AI market.
Thank you. So if I may ask, what would be the first one or two applications for your Wafer-on-Wafer? Is that wearable like glasses or robots or smartphone?
Since we are doing our High-bandwidth product with our customer, so basically this is the customer product end product. Therefore f or customer confidentiality reason. I'm sorry that I cannot share too much detail on the end product.
Anyhow, we will assist our customer more than one of them into very different type of the end market product area. So we will not be limited to one area. We will be depends on our customer. They may develop into h andheld, they may develop into PC or mobile phone or even cloud market. So we were basically working hard to assist them to achieve their goal.
Okay, thank you. Yeah, it's very clear. Sorry for apology. Apologize for my poor voice will be. Back to the queue. Thank you.
It sounds good.
Okay, thank you.
Thank you. Next one. Simon Woo, Bank of America. Go ahead, please.
Thank you. Dr. Lee, congrats on great results. Very quickly, do we have any data you can share for the revenue mix for entire DDR3 versus entire DDR4 and DDR5, the mix ratio in terms of the maybe bit shipment or revenue or both?
Okay. As I explained that we have i ncreased our supply to DDR4 and low power DDR4. These two products account for more than 50% of our revenue. Okay. And then we are shipping around 10% i n the DDR5 and for low power we had also low power DDR4 and low power DDR3. Low power DDR2 that's in general accountable for almost 20-some%. Okay, and with the DDR3 imbalance.
So, you are, when you talk about DDR3, you are excluding the low power DDR3, sir, just a commodity DDR3.
When I'm talking about DDR3, and it's excluding the low power DDR3.
Okay, so once we deduct 50%, 10%, 22%, maybe the DDR3 is maybe high-teen percentage.
Maybe 10. Yeah, yeah.
That's in terms of the revenue, right?
Yeah. In terms of revenue.
In that case, g iven the fact DDR3 price premium per bit substantially high DDR4 too also maybe a percentage of the volume. I mean the bit volume DDR3 could be very, very like. I mean the missing digit or losing digit r ight?
Actually, the DDR3 and DDR4, DDR5 pricing is catching up as well, and low power DDR4 pricing is actually going well as well.
Yeah. Okay, sure, sir.
Yeah.
And then, today, your interesting comment, the demand outlook. Yes. PC some downside risk definitely because of the replacement cycle with the DDR5. But you think the DDR4 demand from the consumer, even the industrial DDR, is still great. Particularly for the consumer.
Yeah. Will last much longer.
Yeah. Any reason? Because consumer electronics need more advanced memory. But why you think consumer electronics?
There are several reasons. On that, one reason I already explained that DDR4 has 8 gigabit, which right now is at a sweet spot of the consumer application. And the second reason is that also e very customer when their application they may have their complete infrastructure that including their PCB, their chipset, everything all come together. So it's not easy for them to move from say DDR4 to DDR5 for example.
So, plus if they do so, they have to spend a lot of time, a lot of money on their infrastructure change and also have to pay for 16-gigabit DDR5, for example. And what if DDR5 price increases later on? Okay. Meanwhile, if the DDR4 demand remains resilient for the consumer applications, for your cost reduction or per wafer volume increase. Are you ready to use more advanced node, 1V node or even 1C?
We already.
Simon, we already using it.
Is the mainstream or still small portion?
Depends on the market situation that as the customer demand more DDR4, we are doing more and more DDR4 in advanced node.
Yeah, so in that case, maybe some analysts that already have your capacity constraint, your monthly wafer capacity maybe 65K something and then full utilization ratio. But if you use 1B, 1C for the DDR4, you can improve the production volume.
Yeah, that's true. And that's why I already explained in Nick's question that we will not have a major capacity increase until our new fab ready, which is 2027. Okay. And between now and 2027 we will have to rely on manufacturing efficiency improvement. Okay. As well like yield improvement, yield improvement, you know, all those equipment efficiency improvement to have some marginal improvement in our output. Okay. Yeah. Other than that, don't have a major, major output improvement for next year.
Yeah. So is it fair to say mid 60k? I mean around the 65k wafers is your current capacity for now, is that fair?
Fair statement? Yeah.
Yeah, and then if these node migration continues, is it fair to assume more than 10% production growth possible per wafer next year?
Low migration. Contribute to more than that. Okay. More than 10%.
Big growth.
Yeah, much more than 10%. However, the bottleneck is the fab space. When you do the advanced node require more process step more equipment. So everything is basically bottlenecked by fab space in Nanya.
Yeah, yeah, yeah, yeah, yeah. Okay, great s ir, maybe. Sorry, the time constraint. One last question. Some investors keep asking how the Nanya able compete with the big players in the DDR5 area. Because you are doing great job here. But big three guys also promoting the more and more advanced DDR5. So question is, how you going to compete in the DDR5 market area, sir?
Well, very much like DDR4 and DDR5, we are preparing DDR5 in the future. We are preparing DDR5 and shipping now, and we will also move into DDR6, preparing us for the future. Meanwhile, we will have some longevity supply for the product that customer may require for longer duration, like DDR4. DDR3 we're still making. Okay, and DDR5 actually looks promising as far as I can tell from the product portfolio point of view, we are doing 5600, which is at par with the market demand, and we have our 6400 is already.
On the version of being released. Okay. So, as soon as the market is ready, we will be ready there. Okay, and then it will depend on. In general, our cost structure and our cost structure actually pretty reasonable compared to other supplier, so that now we will continue to migrate our technology, continue to do cost reduction as well, and continue to engage in a new market and also meet customer demand on the utility market.
Great. Dr. Lee, appreciate your insight. Thank you very much.
You're welcome, Simon.
Ladies and gentlemen, allow me to remind you, due to the time limit for the next question, the next caller to ask questions. Please limit your questions to one. Thank you. And next one we'll have Michael Shih. Go ahead, please.
Hi, thanks for your presentation, and I only have one question: is that if in the future have any customer request for like long term contract, how will the company to respond in terms of this kind of request? Thanks.
Yeah, at this time is that the customer demand for longer term contract becoming more compared to the downtrend now is uptrend. Okay. So yes, we are seeing the customer being more proactive to g et long-term contract. We are seeing more quarterly contract or even yearly contract in discussion and a ll is happening as we speak.
Thanks. And I only have one follow-up and the one is that how about like the allocation of year, quarter and monthly, will it change in the future? And the second will the pricing. How will the company pricing the ASP to this kind of longer-term customer? Thanks.
Of course, this is all up to negotiation on each customer. Okay. Depends on their volume, their market sector. All will be different case by case. Okay. And okay. Long-term contract. Of course they are going to be much m ore price ASP stability. Okay. And ASP stability is also good for both sides. Okay. So that's all subject to negotiation case by case.
Got it. Thanks.
Thank you. Next we'll have Chao- Sheng, Bloomberg Intelligence. Go ahead, please.
Hello. Totally. Thanks for having me. I just have a quick question on the sales breakdown. You just give us the breakdown by your products. Is it possible for you to give us a breakdown by your end markets. By PC, by mobile, by consumer and also possibly server as well by consumer. We're running around 60% or so.
And a low power. We run in by 15%-20% which is on different kind of mobile. Okay. And then b alance with the PC and t he cloud. Okay.
Okay. So just a follow up question. On the consumer side, you mentioned that. The DDR4 will still be the major t hat DRAM product for this segment. But in your opinion, when will the c onsumer segment will also migrate to the DDR5? What's your estimation?
Yeah, as I explained just now to Nick that for consumer side if they need high density. Yeah, possible they move to DDR5 and when they move to DDR5 then mostly they have to change their infrastructure including their chipset, PCB, et cetera have to change. Okay. And.
So it's possible that some of the consumers move to DDR5. Okay. But also possible to move down to DDR3. However, DDR4 has a pretty sweet spot of 8 gigabit. If you move to DDR5 you need to go to 16 gigabit, you move to DDR3 only 4 gigabit, you have to do DDP et cetera. That's actually more costly and more problems can come up with. Okay. So yes, the customer and the market will make their best adjustment to what they need. What I generally just described to you is that DDR4 has a pretty nice sweet spot there. And that sweet spot will prolong for some time and there are some areas may move to DDR3, some areas may move to DDR4 that could happen.
Which produces 2027 will be a critical year that we can see whether there will. Be a much better shift, bigger shift.
Shift to DDR5?
Yes.
2027, some product I would say may ship to DDR5. Okay. For instance, some of the SSD used DRAM mainship to DDR5 because they use identity.
Thank you. I'll go back to Q.
Thank you. Next one. Nicolas Gaudois, UBS. Go ahead please.
Sorry. Hi there.
Hi.
Taking all the factors you explained, Dr. Lee, for capacity next year. And yield optimization efficiency, we're coming off a high base for your bit growth obviously in 2025. Realistically what is the range of bit shipment and growth you could potentially achieve into 2026?
If we compare to beginning of this year. Like Q1, our bit shipment will be improved quite a bit next year. But if you compare to September and August this year, the past two months, likely we will maintain plus minus 10% of that range. Means that we already come up to pretty high.
Yeah, exactly. So if we average this, is it fair to say that I'm just trying to follow exactly what you said? So could we still grow above 20% or is that going to be changing? Because as you said, as you move into the second half of next year, the comps are going to be a lot harder.
Right. Increasing, i n a big percentage is very hard. Okay, I would say next year our monthly shipment likely to stay around plus minus 10% of what currently high point.
Okay, understood. That's helpful. Thank you very much actually.
Okay, you're welcome, Nick.
Thank you. Ladies and gentlemen, we thank you for your questions. Let's move on to the webcast questions and Dr. Lee, please begin.
Okay, we have question from KGI Michael Shen, you have two questions. The question one, when we expect our DDR5 to begin mass shipment in module four? The answer is we already shipped in module four with the pricing that meet commercial requirement. Yeah, we are doing this basically in a module form and is basically in the PC commercial market. Okay, your Q2.
Your question 2. If the TSV and stacking technology for our wafer-on-wafer product are progressing smoothly based on our current timeline, are we on track to meet customer target for mass production? Yes, so far of course customer w ant to be a little bit faster, speedier. Yeah, but based on our own planning status, we are meeting what we need, but we again, is there any opportunity at all? We will expedite our delivery as well.
Then a question coming from Yuanta by Michael Shih. You have three questions. Your question one is DDR4 16 gigabit shipment target in the future quarter? Yes, we are targeting. Hopefully the end of Q2 next year for 16 gigabit DDR4 shipment.
Your question two, current inventory allocation DDR4 and DDR5. Our DDR4 inventory is very healthy and so is DDR5. Okay. And DDR4 of course is in a little bit shortage. We actually are in a shortfall. Okay.
Will the equipment pull in schedule for the new fab? Currently the equipment plan is on schedule, and we will be first of all our fab construction going on, and then we will go into facility installation and then followed by cleanroom installation. The equipment installation likely happened in 2027.
And question from SinoPac Securities Stanley, question one for you is given that major global suppliers are gradually winding down DDR4 production, how should we think about your DDR4 market share trajectory into 2026? And as I m ay already explain that DDR4 market by itself may be also getting smaller. That's one of the key reason why the major supplier started to end of life. The other key reason is that when the non-AI continue to ASP go down to almost 30% a year they decided to end of life. As a result they reduce their supply but they're not totally out of supply yet and they may change when they're going to really end their supply and that still.
Wait and see, and so we will continue to supply our DDR4 to meet our customer demand as possible as we can. As far as our share, it's still very difficult to give you an idea because first of all market is gray, your PC may decrease sooner and server may gradually reduce their demand in DDR4 as well. Remaining is a consumer side. Okay, and trajectory-wise it's going to be combination of all this happening.
Your question two, would you consider temporary suspending quotation to observe market dynamics? We will continue to m eet our customer requirement as much as we can. Okay, and that quotation wise it's really really. We don't intentionally doing that. We only doing d ay by day of the customer discussion and negotiation.
Q3, could you give us an update on the progress of phase one? I already explained that in the last question. Likely equipment installation will happen in 2027 and if we move a little bit faster, could be second quarter 2027. What process node and product type are planning for this facility? I would say minimum our third generation of the 10-nanometer process node and fourth generation as well. These two generations we currently already piloting in our current Fab.
And question from Yuanta Securities by Joey Tung. And your question first. First one, what applications are driving the current demand for DDR4? And I believe I answered that many times already. Which customer are most active purchasing at a premium?
See, I would say most of the customer now a re demanding DDR4 i ncluding the consumer area, some cloud area as well as some PC areas still have some demand. And our next question comes from Mandy from HN Funds. Your first question. Our current revenue are all based on contract prices? Yes, most of the revenue are based on our contract price. We have yearly contract, quarterly contract and monthly contract. And we don't sell much to the spot market anymore. Okay. Only very little. Okay.
And y our q uestion: Institutions estimate that contract price in fourth quarter 2025 would double compared to 3Q25. But the sufficient rate is negative. Is this information correct? Specifically, I cannot give you the price going to be double or s omewhat. It would depend on market portfolio, product portfolio. Okay. Some product will have.
More price increase than the other. Some product may already at a pretty high price. Therefore their price hiking will be relatively smaller. Okay, so the question about price doubling. I cannot answer this question directly at a sufficient rate. Likely the sufficient rate for DDR4 still under supply likely in Q4.
Question two: Given that consumer electronic demand is not strong, how do you view the bit shipment growth Q2Q from fourth quarter and first quarter? And consumer electronics. Some electronics actually are doing pretty good. So we're seeing the Bit Shipment to remain pretty strong in fourth quarter 2025 and first quarter 2026.
Your third question is, with weak consumer electronic demand, is it possible for contract price to continue rising into next year? At this moment, based on what we're seeing, that depends on, as I say, the product portfolio, some product portfolio, the price increasing would probably slowing down if they already have pretty sweet pricing from the supplier side, and some pricing may increase a little more because of the pricing still stay low for the margin point of view.
So that's end of all questions. I'd like to thank you all for participating in Nanya Investor Conference and thank you for your support to Nanya Technology. Bye bye.
Thank you, Dr. Lee. And that concludes our conference call today. Please be advised that the replay of the conference will be accessible within three hours from now, which will be available through Nanya Technology's website at www.nanya.com. We hope you will join us again next quarter. Thank you for your participation and have a wonderful day. You may disconnect your line at this time. Thank you again. Goodbye.
Thank you.
Your meeting is ended.