摩根士丹利-亚太大中华半导体：旧存储赛道持续存在非对称风险-Greater China SemiconductorsAsia Pacific：Old Memory：Ongoing Asymmetric Risks-20260419

MorganstanleyRESEARCH

April19,202611:06PMGMT

GreaterChinaSemiconductors|AsiaPacific

OldMemory:OngoingAsymmetricRisks

WecontinuetopreferMLCNANDandNORFlashoverDDR4.WithinlegacyDRAM,wethinkspecmigrationandnew

opportunitiesdifferentiatestocks.

KeyTakeaways

MLCNAND/NORpricingpowershouldacceleratefrom2Q26ledbyMacronix.

TheDDR4pricinghikeislikelytobeup60%in2Q,thendecelerateinto2H.

IntelEMIBcoulddrivenotableupsideonsiliconcapacitors,mainlyfromAPMemory.

SpecmigrationshouldcontinuetobethehighlightfromPSMCin2027.

WeareOWMacronix,APMemory(raisedPT),PSMCandGigaDevice(raisedPT).WeareEWNanyaandWinbond.

Keepingourselectiveview;needtoconsideroutlookbeyond2026:Oldmemorystockstypicallyshowhighervolatilitywhenthecyclestartstorollforward

(see

memorydowngradenote)

.WesticktoourviewthatlegacyNAND(especiallyMLCNAND)isbetterthanDDR4.Inthisnote,wealsohighlightnewopportunitiesforlegacyDRAMvendorstotapintheadvancepackagingarea,growingalongwith

risingnonGPUserverdemand

(seeShawnKim'sagenticAIreport)

.

DDR4-definitelystillintightness,butmomentumdecelerating:Webelieve

DDR48GbpricingwilllikelybeaboveUSD20soon(and4GbaboveUSD10).Somecustomersstillseestrongmomentumgivenpull-ins(e.g.,PC).ThissuggestsDDR4vendorscouldseehighprofitabilityinthenearterm.Thatsaid,weseelimitedsharepriceupsideamidpricinghikedeceleration,KVcachecompression,serversystemoptimizationandLTAdiscussions.CXMTisalsoaddingsomeDDR4support

(see

GigaDevicenote)

.

Legacyflash-acceleratingthepricinghike:WecontinuetoseeextremetightnessforMLCNAND,especiallywit

hreportsofKioxiaphasingoutofthemarketafter

Samsung

(TrendForceNews,31Mar2026).WebelieveMXICistryingtoreallocatecapacitytosupportMLCNAND,resultinginsupplyreductiononNOR.Thus,we

believebothMLCNANDandNORpricingcouldbeup100%atmostin2Q,andbemaintainedathighdoubledigitsinto2H.

NewopportunitiesfromEMIB-T:WebelieveAPMemorywillbethemajorEMIB-TproxyinTaiwan,asitistheproviderofsiliconcapacitors.Amidhighpower

consumptionfromASIC(e.g.,TPU),wethinkitscontentperchipcouldbenear

USD100.Thiscouldbesignificantconsideringpotentialfuturecustomers

(seeour

EMIBreport)

.Incrementalrevenuecouldbe50%+vs.the2026elevel.Wethinkthemostimportantfactortofocusonisprepaymentfromsomeend-customers.

IDEA

MoRGANSTANLEyTAiwANLimiTEd+DanielYen,CFA

EquityAnalyst

Daniel.Yen@

+88622730-2863

CharlieChan

EquityAnalyst

Charlie.Chan@

+88622730-1725

MoRGANSTANLEyAsiALimiTEd+DaisyDai,CFA

EquityAnalyst

Daisy.Dai@

+8522848-7310

MoRGANSTANLEyTAiwANLimiTEd+TiffanyYeh

EquityAnalyst

Tiffany.Yeh@

+88627712-3032

MoRGANSTANLEyAsiALimiTEd+EthanJia

ResearchAssociate

Ethan.Jia@

+8523963-2287

GREAtERChinATEchnologySEmiconductoRs

AsiaPacific

IndustryViewAttractive

WHAT’sCHANGED

APMemoryTechnologyCorp

(6531.TW)

From

To

PriceTarget

NT$607.00

NT$777.00

GigaDeviceSemiconductorBeijingInc(603986.SS)

From

To

PriceTarget

Rmb301.00

Rmb348.00

MorganStanleydoesandseekstodobusinesswith

companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionson

communicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.

2

Morganstanley

RESEARCH

IDEA

KeyChartsandExhibits

Exhibit1:Orderofpreference:GCmemory

Macronix

2337.TW

APMemory

6531.TW

GigaDevice

603986.SS

PSMC

6770.TW

Winbond

2344.TW

Rating

Overweight

OverweightOverweight

Overweight

Equal-Weight

TradingCurrency

TWD

TWDCNY

TWD

TWD

PriceTarget

202.0

777.0348.0

71.0

100.0

CurrentPrice

131.0

644.0289.0

52.6

87.8

Upside/(Downside)(%)

54%

21%20%

35%

14%

MarketCap(inUSDmm)

7,513.9

3,312.128,293.1

6,920.0

11,663.9

AvgDailyTradedVol(inUSDmm)

135.5

48.1871.0

158.1

281.7

StreetView:Ratings

Buy/Overweight

|||||||||||||||||||||||90%

|||||||||||||||||||||||||100%|||||||||||||||||||||||92%

||||||||||40%

|||||||||||||||||||78%

Hold/Equal-weight

0%

0%||8%

|||||||||||||||60%

||||||22%

Sell/Underweight

|||10%

0%0%

0%

0%

BullCaseValue

326.0

1,145.0604.0

113.6

120.0

Upside(%)

149%

78%109%

116%

37%

BearCaseValue

119.5

376.0219.0

35.5

41.4

Downside(%)

-9%

-42%-24%

-33%

-53%

Risk/RewardSkew

17.0

1.94.5

3.6

0.7

MorganStanleyEstimates

FY26e

TWD

TWDCNY

TWD

TWD

Sales

56,677

9,33317,061

66,303

224,249

EBITDA

20,949

2,9016,005

12,145

106,288

EBIT

13,412

2,8415,736

4,581

90,677

EPS

5.90

16.168.10

8.61

16.57

FY27e

Sales

109,328

13,77724,555

72,058

264,897

EBITDA

48,356

4,9059,504

18,971

129,416

EBIT

43,644

4,8429,235

11,931

109,239

EPS

19.61

26.3212.98

2.21

19.87

FY26MSevs.ConsensusMean

Sales

-18.0%

15.2%18.0%

4.7%

8.3%

EBITDA

-6.7%

13.9%2.3%

-26.1%

5.8%

EBIT

-41.6%

25.6%11.1%

-33.2%

6.8%

EPS

-44.9%

-2.7%11.2%

28.0%

7.7%

FY27MSevs.ConsensusMean

Sales

2.0%

13.2%35.4%

4.8%

-1.0%

EBITDA

-0.6%

17.6%35.6%

-9.4%

-1.8%

EBIT

27.4%

19.5%41.7%

5.6%

3.2%

EPS

-23.7%

14.5%40.0%

-9.9%

-3.4%

ValuationMultiplesatLastClose

FY26e

P/E

22.2x

39.9x35.7x

6.1x

5.3x

EV/EBIT

20.7x

32.6x31.3x

18.1x

4.3x

EV/EBITDA

13.2x

31.9x29.9x

6.8x

3.7x

EV/Sales

4.9x

9.9x10.5x

1.2x

1.7x

FCFYield

-12.0%

1.8%2.3%

54.9%

10.2%

FY27e

P/E

6.7x

24.5x22.3x

23.8x

4.4x

EV/EBIT

5.6x

18.8x18.8x

6.8x

2.6x

EV/EBITDA

5.0x

18.5x18.3x

4.3x

2.2x

EV/Sales

2.2x

6.6x7.1x

1.1x

1.1x

FCFYield

15.5%

3.2%4.0%

6.0%

32.5%

Source:FactSet,MorganStanleyResearch(e)estimates.PricingasofApril17,2026.

Morganstanley

RESEARCH

IDEA

Exhibit2:NORflashdemandandsupplygrowthrates

Source:Companydata,MorganStanleyResearch

Exhibit3:NORflashdemandgrowthandsupplygrowthbydensity

Exhibit4:DDR4quarterlysupplyanddemandsummary

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

Supply(mnGb)(LHS)Demand(mnGb)(LHS)

Oversupply/(undersupply)ratio(RHS)

40%

30%

20%

10%

0%

-10%-20%

-30%

Source:MorganStanleyResearch(e)estimates

Exhibit6:Quarterlysupplybreakdown(mnGb)

Source:Companydata,MorganStanleyResearch

Exhibit5:Quarterlyoversupply/undersupplyratiovs.NanyaandWinbondpricingQ/Qchange

Source:MorganStanleyResearch(e)estimates

Exhibit7:Quarterlydemandbreakdownbyproduct(mnGb)

20,000

18,000

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

SamsungHynixMicronCXMTNanyaWinbondPSMCJHICC

Source:MorganStanleyResearch(e)estimates

30,000

25,000

20,000

15,000

10,000

5,000

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

SmartphonePCServerTVSwitchCacheDRAMOthers

Source:MorganStanleyResearch(e)estimates

MoRGANSTANLEyREsEARcH3

4

Morganstanley

RESEARCH

IDEA

Exhibit8:

EV/salesvs.DRAMpriceYoY

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

1120%

920%

720%

520%

320%

120%

-80%

4-years4-years4-years4-years4-years

EV/Sales-SamsungElec&HynixDRAMContractYoY(RHS)

3.9

3.4

2.9

2.4

1.9

1.4

0.9

0.4

Source:FactSet,MorganStanleyResearch.FutureDRAMcontractY/YbasedonMorganStanleyResearchestimates.

Exhibit9:MemoryvendorsGM

1Q11

4Q11

3Q12

2Q13

1Q14

4Q14

3Q15

2Q16

1Q17

4Q17

3Q18

2Q19

1Q20

4Q20

3Q21

2Q22

1Q23

4Q23

3Q24

2Q25

1Q26

4Q26

3Q27

2Q28

100%

80%

60%

40%

20%

0%

-20%

-40%

SamsungSKhynixMicronNanyaTechWinbond

Source:Companydata,MorganStanleyResearchestimates

Exhibit11:DDR48Gb(1Gx8)pricingchart

DDR48Gb-1Gx82666Mbps

27.25

SpotContract

13.00

Jan-20Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26

US$

30

25

20

15

10

5

0

Jan-19

Source:DRAMeXchange,MorganStanleyResearch;dataasofMar13,2026

Exhibit10:MemoryvendorsOPM

1Q11

4Q11

3Q12

2Q13

1Q14

4Q14

3Q15

2Q16

1Q17

4Q17

3Q18

2Q19

1Q20

4Q20

3Q21

2Q22

1Q23

4Q23

3Q24

2Q25

1Q26

4Q26

3Q27

2Q28

80%

60%

40%

20%

0%

-20%

-40%

SamsungSKhynixMicronNanyaTechWinbond

Source:Companydata,MorganStanleyResearch

Exhibit12:DDR516Gb(2Gx8)pricingchart

US$

43.0

38.0

33.0

28.0

23.0

18.0

13.0

8.0

3.0

Jan-23

Mar-23

May-23

Jul-23

Sep-23

Nov-23

Jan-24

Mar-24

May-24

Jul-24

Sep-24

Nov-24

Jan-25

Mar-25

May-25

Jul-25

Sep-25

Nov-25

Jan-26

Mar-26

39.33

DDR516G(2Gx8)4800/5600

SpotContract

30.00

Source:DRAMeXchange,MorganStanleyResearch;dataasofMar13,2026

MoRGANSTANLEyREsEARcH5

Morganstanley

RESEARCH

IDEA

IntelEMIBOpportunityforAPMemory

Intel’s(coveredbyMorganStanleyResearchAnalystJoeMoore)EmbeddedMulti-dieInterconnectBridge(EMIB)takesamoremodularandcost-efficientapproach:Insteadofafullinterposer,itusessmallembeddedsiliconbridgesonlywherehigh-bandwidth

connectionsareneeded,whilerelyingontheorganicsubstratefortherest.Theoretically,thisimprovesyieldandreducescost,whileallowingflexiblechiplet-baseddesignsacrossdifferentprocessnodes.

ThedownsideisthatEMIBdoesnotprovideauniformhigh-densityinterconnectacrosstheentirepackage,whichcanlimittotalbandwidthandmakesystem-levelroutingmorecomplex.Asaresult,itisgenerallylessoptimalforextremebandwidthusecases

comparedtoCoWoS,butitcansupportlargerreticle-sizedesign.

Also,besidesEMIBtechnologyitself,ourlatestindustrycheckssuggestthatthosechip

designersareconcernedabouttheyieldorexecutionfromIntelsinceitlacksofthe

experienceofmassproduceEMIB-Tproductsaswellasservingexternalclients.Therefore,comparedtoTSMC,theoperationalriskandultimateyieldwouldalsobetakeninto

considerationfromthosecustomerstoallocatehowmuchchipproductiontoIntelEMIB-T.

Exhibit13:Intel'sEMIBcansupportlargerchipswithmorereticles(>12)ifitssupplychaincanexecutewell

Source:Intel

6

Morganstanley

RESEARCH

IDEA

Exhibit14:Intel'sEMIB-T(newarchitecture)embedssiliconbridgesfeaturingverticalcopperconnections(TSVs)intoorganicsubstrates,enablingsuperiorpowerdelivery,reducednoise,andhigh-speedHBM4memoryintegration

Source:Intel

AccordingtoIntel,tofurtherstabilizepowerdelivery,IntelFoundryintegratesembeddeddeeptrenchcapacitors(eDTC)forultra-highcapacitancedensityclosetotheload,therebyflatteningPDNimpedanceacrossthebasedie.EmbeddedMIM(eMIM-T)technology

deliverssuperiordecouplingatthebasedie,leveragingthesameadvancedarchitectureasOmniMIMevenonmaturenodes.Forprecise,high-speedpoint-of-loadregulation,

CoaxMILtechnologyembedsmagneticinductorsintothesubstrate,enablingintegratedvoltageregulators(IVRs)withrapidresponseandminimalloss.Together,these

technologiesformascalablepowerdeliveryfabricthatkeepspacewithrisingcomputedensity.WebelievetheseeDTCareIPDproductsthatAPMemoryprovides.

Exhibit15:AnexampleofIntelFoundry’spowerdeliverysolutionshownatIntelDirectConnect2025,showcasingforward-lookingplansforincreasedeMIM-Tcapacity;wethinkthisisadoptingAPMemory'sIPD,whichistheeDTChere

Source:Intel

ForIntelEMIB'scustomerfront,ourcheckssuggestthatbothGoogleandAWShave

MoRGANSTANLEyREsEARcH7

Morganstanley

RESEARCH

IDEA

reachedouttoIntel'sEMIB-Tformechanicaltestingvehicles(MTV);webelievethe

productioncouldberelatedtoMediaTek'snext-generation2nmversionTPUaswellas

Alchip'snextgeneration2nmTrainium4,whilethetrialrunislikelytobein2027andmassproductiontobein2028ifeverythinggoessmoothly.SinceAlchipalreadyhasastrong

relationshipwithIntelonGaudiproduction,webelieveAlchiphasbeenmorefamiliarcollaboratingwithIntelanditsworkflow.

Westilldonotyetknowhowthosenext-generationchipswillbeallocatedbetweenIntel'sEMIB-Tvs.TSMC'sCoWoS/CoPoS.However,bothGoogleandAWSarethetwoleadersamongmajorCSPsintermsofAIASICdesign.Wethereforeseethesetwo

companiesneedinglargerchipsizedesignintheirASICroadmap;theallocationwill

dependgreatlyon1)Intel'sEMIB-Tproductionyield,2)TSMC'sCoWoSreticlesupport,andpotentially3)TSMC'sCoPoSschedule.

BesidesGoogleandAWS,ourchecksalsosuggestthatMetaisapproachingIntelfor

potentialEMIB-TproductionforitsfutureAIASICaswell.However,theprogressmaybeatanevenearlierstagecomparedtoGoogleandAWS,inourview,becauseitsASICislessmaturethanotherCSPs.

Forfurtherdetails,see:

GreaterChinaSemiconductors:TheFoundryFloorplan:TSMC

previewupdate;CoWoSvs.EMIBcompetition(14Apr2026).

8

Morganstanley

RESEARCH

IdEA

APMemory:EstimateRevisionSummary

Weraiseour2026/2027/2028EPSestimatesby2%/13%/13%,respectively:Wefactorin1Q26preliminarysales,whichweseeleadingtohigher2026earnings.Weraiseincreaseour2026-27revenueforecastsduetothestrongerlPDoutlookandabetterpricing

environmentfortheloTbusinessfrommemorypricehike.lncomparison,consensus2026and2027EPSestimatesareNT$14.52andNT$22.98,respectively.OurstrongerEPS

forecastsreflectourmoreconstructiveviewonthelPDshipmentoutlook,webelieve.

Exhibit16:APMemory–Estimaterevisions

(NT$mn)

New'26e

Old'26e

Diff.New'27e

Old'27e

Diff.New'28e

Old'28e

Diff.

Netsales

9,333

8,572

9%

13,777

11,640

18%

18,865

16,678

13%

COGS

4,784

4,175

6,724

5,449

8,896

7,833

Grossprofit

4,550

4,397

3%

7,053

6,191

14%

9,969

8,845

13%

Operatingexpenses

1,709

1,625

2,211

1,927

2,913

2,659

Operatingprofit

2,841

2,772

2%

4,842

4,265

14%

7,056

6,187

14%

Non-op.income(exp.)

343

343

343

343

343

343

Pretaxincome

3,183

3,115

2%

5,185

4,607

13%

7,399

6,529

13%

Taxes

556

544

906

805

1,293

1,141

Netincome

2,627

2,570

2%

4,279

3,802

13%

6,106

5,388

13%

ReportedEPS

16.16

15.81

2%

26.32

23.39

13%

37.56

33.14

13%

Margins

Grossmargin

48.7%51.3%

-2.6%

51.2%53.2%

-2.0%

52.8%53.0%

-0.2%

Operatingmargin

30.4%32.3%

-1.9%

35.1%36.6%

-1.5%

37.4%37.1%

0.3%

Pretaxmargin

34.1%36.3%

-2.2%

37.6%39.6%

-1.9%

39.2%39.1%

0.1%

Netmargin

28.1%30.0%

-1.8%

31.1%32.7%

-1.6%

32.4%32.3%

0.1%

Source:Companydata,MorganStanleyResearch(e)estimates

Exhibit17:APMemory–Quarterlyfinancialsummary

YEDEC31(N0T$mn)01Q26e2Q26e3Q26e4Q26e1Q27e2Q27e3Q27e4Q27e1Q28e2Q28e3Q28e4Q28e202202620272028

TotalRevenues

2,101

2,222

2,451

2,558

2,938

3,168

3,650

4,021

4,276

4,566

4,916

5,108

5,658

9,333

13,777

18,865

SequentialChange

12.5%

5.8%

10.3%

4.4%

14.8%

7.8%

15.2%

10.2%

6.3%

6.8%

7.7%

3.9%

ChangevsYearAgo

115.5%

67.3%

64.0%

37.0%

39.9%

42.5%

48.9%

57.2%

45.5%

44.1%

34.7%

27.0%

35.0%

65.0%

47.6%

36.9%

CostofSales

1,098

1,145

1,248

1,293

1,456

1,562

1,765

1,941

2,025

2,158

2,316

2,397

3,024

4,784

6,724

8,896

PercentofRevenues

52%

52%

51%

51%

50%

49%

48%

48%

47%

47%

47%

47%

53%

51%

49%

47%

GrossProfit

1,003

1,078

1,204

1,265

1,482

1,606

1,885

2,081

2,250

2,408

2,600

2,711

2,634

4,550

7,053

9,969

PercentofRevenues

47.7%

48.5%

49.1%

49.5%

50.4%

50.7%

51.6%

51.7%

52.6%

52.7%

52.9%

53.1%

46.5%

48.7%

51.2%

52.8%

IncrementalMargin

31%

61%

55%

57%

57%

54%

58%

53%

67%

54%

55%

58%

33%

52%

56%

57%

TotalOpex

401

411

439

458

499

504

577

631

667

708

757

781

1,234

1,709

2,211

2,913

PercentofRevenues

19.1%

18.5%

17.9%

17.9%

17.0%

15.9%

15.8%

15.7%

15.6%

15.5%

15.4%

15.3%

21.8%

18.3%

16.0%

15.4%

OperatingIncome

602

667

765

807

982

1,103

1,308

1,449

1,583

1,700

1,843

1,929

1,399

2,841

4,842

7,056

PercentofRevenues

28.6%

30.0%

31.2%

31.6%

33.4%

34.8%

35.8%

36.0%

37.0%

37.2%

37.5%

37.8%

24.7%

30.4%

35.1%

37.4%

TotalNon-operatingIncome(Loss)

86

86

86

86

86

86

86

86

86

86

86

86

119

343

343

343

ProfitBeforeTaxes

687

752

851

893

1,068

1,188

1,394

1,535

1,669

1,786

1,929

2,015

1,518

3,183

5,185

7,399

PercentofRevenues

33%

34%

35%

35%

36%

38%

38%

38%

39%

39%

39%

39%

27%

34%

38%

39%

Taxes

120

131

149

156

187

208

244

268

292

312

337

352

279

556

906

1,293

TaxRate

17.5%

17.5%

17.5%

17.5%

17.5%

17.5%

17.5%

17.5%

17.5%

17.5%

17.5%

17.5%

18.3%

17.5%

17.5%

17.5%

ReportedIncome(TWGAAP)

567

621

702

737

881

981

1,150

1,267

1,377

1,474

1,592

1,663

1,240

2,627

4,279

6,106

PercentofRevenues

27.0%

27.9%

28.6%

28.8%

30.0%

31.0%

31.5%

31.5%

32.2%

32.3%

32.4%

32.6%

21.9%

28.1%

31.1%

32.4%

ChangevsYearAgo

71%

-214%

-1%

-4%

55%

58%

64%

72%

56%

50%

38%

31%

-21%

112%

63%

43%

ReportedEPS(NT$,TWGAAP)

3.49

3.82

4.32

4.53

5.42

6.03

7.07

7.79

8.47

9.07

9.79

10.23

7.63

16.16

26.32

37.56

ChangevsYearAgo

71%

-214%

-1%

-4%

5%

58%

64%

72%

56%

50%

38%

31

-22%

112%

63%

43%

Source:Companydata,MorganStanleyResearch(e)estimates

MoRGANSTANLEyREsEARcH9

Morganstanley

RESEARCH

IdEA

APMemory:ValuationMethodology

WeraiseourpricetargettoNT$777fromNT$607tofactorinpreliminarysalesfor1Q26andourestimatechangesfor2026-28.Wealsoliftourintermediategrowthratefrom11%to12.8%aswefactorintheIntelEMIBopportunityforAIinthelongrun.

Asidefromintermediategrowth,ourotherresidualincomemodelassumptionsare

unchanged,including:1)costofequityunchangedat9.2%(2.0%risk-freerate,6%risk

premium,1.2beta);2)payoutratioof67%;and3)terminalgrowthrateof3%tobemoreinlinewiththelong-termmacrogrowthrate.OurnewPTimplies2026eP/Eof48xand2027eP/Eof30x–morethan1s.d.abovethehistoricalaveragesince2020.OurbullandbearcasevaluesrisetoNT$1,145(fromNT$895)andNT$376(fromNT$294),respectively.

Exhibit18:APMemory:ResidualIncomemodel

(NT$mn)2026e2027e2028e2029e2030e2031e2032e2033e2034e2035e2036e2037e

TotalEquity

14,156

16,666

19,890

22,623

25,706

29,182

33,102

37,523

42,508

48,130

54,470

61,620

NetProfit

2,627

4,279

6,106

6,885

7,765

8,756

9,874

11,135

12,557

14,161

15,969

18,009

ROAE

19.8%

27.8%

33.4%

32.4%

32.1%

31.9%

31.7%

31.5%

31.4%

31.2%

31.1%

31.0%

ResidualIncome

1,311

2,627

4,033

4,612

5,187

5,836

6,567

7,392

8,321

9,370

10,553

11,886

Spread

10.6%

18.6%

24.2%

23.2%

22.9%

22.7%

22.5%

22.3%

22.2%

22.0%

21.9%

21.8%

EndingEquityCapitalPVofForecastPeriod

PVofContinuingValue

EquityValue

No.ofShares

14,156

37,328

74,916

126,400

163

ProjectedPrice(NT$)777

Source:Companydata,MorganStanleyResearch(e)estimates

Exhibit19:APMemory:HistoricalforwardP/E

80

70

60

P/E(x)

50

40

30

20

10

0

Jan-20

Jul-20

Jan-21

Jul-21

Jan-22

Jul-22

Jan-23

Jul-23

Jan-24

Jul-24

Jan-25

Jul-25

Jan-26

+1S.D.:39x

Avg.:27x

-1S.D.:16x

Source:Companydata,MorganStanleyResearch

Exhibit20:APMemory:Earningsestimaterevisionbreadth

2

1.5

1

0.5

0

-0.5

-1

Jan-16Jan-17Jan-18Jan-19Jan-20Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26APMemoryFY2EPSRevision(3MMA)Sharepriceperf.(YoY,RHS)

400%

300%

200%

100%

0%

-100%

-200%

Source:Companydata,MorganStanleyResearchestimates

10

Morganstanley

RESEARCH

IDEA

RiskReward–APMemoryTechnologyCorp(6531.TW)

OWonIPDandWoWopportunities

PRICETARGETNT$777.00

Basecase,derivedfromaresidualincomemodel.KeyRImodelassumptionsinclude1)costofequityconstantat9.2%(2.0%risk-freerate,6%riskpremium,1.2beta);2)payoutratioof

67%;3)terminalgrowthrateof3.0%;and4)medium-termgrowthrateof12.8%.

RISKREWARDCHART

NT$1,145.00(+77.80%)

NT$777.00(+20.65%)

NT$376.00(-41.61%)

0

APR'25OCT'25APR'26APR'27

TWD

1000

750

500

250

NT$644.00

Key:HistoricalStockPerformanceCurrentStockPricePriceTarget

Source:Refinitiv,MorganStanleyResearch

OVERWEIGHTTHESIS

.IPD(interposersanddiscretes)revenueislikelytorampin2026-27,andbefurther

drivenbynewIPDinterposeropportunitiesinto2028.

.Memorybandwidthandpower

consumptionarethenextissuestobe

resolvedinAIcomputing,andwebelieveAPMemory'swafer-onwafer(WoW)packagingtechnologycouldbeaneffectivesolution.

.Thecompanyexpectsmemorybusinesstobestableinthenearterm.

.OverallAIbusinessshouldcontinuetoriseinthemix–apositivereadforthemarginprofile.

.OurPTimplies48x2026eP/Eand30x

2027eP/E-roughly1s.d.abovetheaveragelevelsince2020.

ConsensusRatingDistribution

100%Overweight0%Equal-weight

0%UnderweightMSRating

Source:Refinitiv,MorganStanleyResearch

RiskRewardThemes

SecularGrowth:Positive

TechnologyDiffusion:Positive

ViewdescriptionsofRiskRewardsThemeshere

NT$1,145.00

BULLCASE

71x2026eEPS

Faster-than-expectedAIandIPDbusiness

progresswithPSRAMgeneratingmorecashflow:Weassume:1)WoWpackaging

revenuetoreach>NT$10bn,andIPD

revenuetoreach<NT$8bnby2028;2)totalrevenuetoriseata55%+CAGR,2025-28;and3)grossmargintoincreasefrom46.5%in2025to60%+by2028.

NT$777.00

BASECASE

48x2026eEPS

Fast-growingAIandIPDbusiness,with

PSRAMgeneratingstablecashflows:We

expect:1)WoWrevenuetoreachNT$5.5bn,andIPDrevenuetoreachNT$7.6bnby2028;

2)totalrevenuetoriseata49%CAGR,2025-28;and3)grossmargintoincreasefrom46.5%in2025toover52%in2028.

NT$376.00

BEARCASE

23x2026eEPS

Slower-than-expectedAIandIPDbusinessprogress,withPSRAMfacingintensifying

competition:Weassume:1)WoWpackagingrevenueof~NT$1.5bn,andIPDrevenueof~NT$2bnby2028;2)totalrevenuetoriseata10-15%CAGR,2025-28;and3)gross

margintoremainat~51%by2028.

MoRGANSTANLEyREsEARcH11

Morganstanley

RESEARCH

IDEA

RiskReward–APMemoryTechnologyCorp(6531.TW)

KEYEARNINGSINPUTS

Drivers

2025

2026e

2027e

2028e

1.WifiSales(%)(%)

73.7

55.7

40.8

30.7

2.EthernetSales(%)(%)

7.1

8.7

21.3

29.0

INVESTMENTDRIVERS

·DemandforAIapplications

·Consumertechdemand,especiallyfromtheIoTmarket

GLOBALREVENUEEXPOSURE

0-10%

0-10%

0-10%

0-10%

0-10%

10-20%

10-20%

30-40%

lndia

Japan

LatinAmericaMEA

NorthAmerica

APAC,exJapan,Mainland

Chinaandlndia

EuropeexUK

MainlandChina

Source:MorganStanleyResearchEstimateViewexplanationofregionalhierarchieshere

RISKSTOPT/RATING

RISKSTOUPSIDE

·Stronger-than-expectedconsumerdemand

·Faster-than-expectedIPDrampandWoWpackagingdevelopment

·Mildercompetitionfrompartners(foundry,memoryhouse,GPUvendor)orotherdesignhouses

RISKSTODOWNSIDE

·Weaker-than-expectedconsumerdemand·Slower-than-expectedIPDrampandWoW

packagingdevelopment

·Intensifyingcompetitionfrompartners

(foundry,memoryhouse,GPUvendor)orotherdesignhouses

OWNERSHIPPOSITIONING

Inst.Owners,%Active56.2%Source:Refin