摩根士丹利-亚太大中华区半导体：旧存储-重申不对称风险-Greater China Semiconductors Asia Pacific：Old Memory–Reaffirming Asymmetric Risks-20260428

MorganstanleyRESEARCH

April28,202602:02AMGMT

GreaterChinaSemiconductors|AsiaPacific

OldMemory–ReaffirmingAsymmetricRisks

WeseeongoingupsideonlegacyFlashand2.5DIPD/3DWoWmemory.ReiterateOWonMacronixandAPMemory;raiseAPMemoryPTfurther.

KeyTakeaways

Intelcontinuestomakeprogressonadvancedpackaging,suggestingupsideonAPMemoryIPDin2028.

HigherDRAMpricingcouldsuggestWoWpricingrenegotiation,enlargingTAM.

Macronixearningssuggestscontinuedpricingupsidein2HforMLCNANDandNOR.

HigherDRAMpricingandIntel’scommentarysuggestsupsideSiCapandWoW

TAM:Intelmentionedthatthecompanycontinuedtomakeprogressonadvancedpackaging,includingadditionalgrowthincustomerbacklog(link).WebelieveEMIB-TwillbetheimportantpackagingtechnologywithMediatek’sTPU(link).Ifthereareadditionalclients,therecouldbepotentialupsideonSiCapTAM(link).Wealso

believeWoWTAMcouldbelargergiventhemuchhigherDRAMcost(link).OurpriorassumptionofASPUS$6perGBappearstobetoolowvs.DRAMpricingaboveUS$15.

MacronixearningssuggestedupsideonMLC(Exhibit2):strong1QresultsbeatwashelpedbyeMMC(MLC)whichrecorded+94%Q/Qgrowthand+3,994%Y/Ygrowth.ManagementseeslargeundersupplyforeMMC,andexpectscontinued

pricingupsidein2HforeMMCandNOR.ThecompanyalsoexpectsGMimprovementtocontinue.

DDR4remainsstrongbutupsidelikelycapped:AccordingtotheTaiwanlocal

news,NanyaTechwillpenetrateintotheVRsupplychainthroughLPDDRoffering;thatsaid,wethinkthenewscouldbemisleadingaswebelievetheSOCAMM2willrequireLPDDR5X,whichwehaven’tseenthesamplefromthecompany.Inthenearterm,wecontinuetoseepricinghikeinto3QbutlikelycappedonUS$25perGB

evenfornetworkingclients.Meanwhile,wedoseeGigaDevicetryingtorampup16GLPDDR4and32GDDR4basedongen4technology.

Keepingourselectiveview;upAPMemoryPT:WereviseupAPMemory'sPTtoNT$1,000;weestimateitsearningstogrow60%+inboth2027and2028,boostedbySiCapandWoW.Weestimate74%oftherevenuecomingfromthesenew

opportunitiesin2028.ForMacronix,weretainOWandourTopPick.

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

EthanJia@morganstanleycom

+8523963-2287

GREATERCHiNATEcHNoLoGySEmicoNDucToRs

AsiaPacific

IndustryViewAttractive

WHAT’sCHANGED

APMemoryTechnologyCorp

(6531.TW)

From

To

PriceTarget

NT$777.00

NT$1,000.00

MorganStanleydoesandseekstodobusinesswith

companiescoveredinMorganStanleyResearch.Asaresult,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofMorganStanley

Research.InvestorsshouldconsiderMorganStanley

Researchasonlyasinglefactorinmakingtheirinvestmentdecision.

Foranalystcertificationandotherimportantdisclosures,refertotheDisclosureSection,locatedattheendofthisreport.

+=Analystsemployedbynon-U.S.affiliatesarenotregisteredwithFINRA,maynotbeassociatedpersonsofthememberandmaynotbesubjecttoFINRArestrictionson

communicationswithasubjectcompany,publicappearancesandtradingsecuritiesheldbyaresearchanalystaccount.

Morganstanley

RESEARCHIDEA

Reactiontoearnings

Impacttoourthesis

Financialresultsversusconsensus

Directionofnext12-monthconsensusEPS

MacronixInternationalCoLtd

(2337.TW)

Strengthensourthesis

Modestupside

Modestrevisionhigher

Source:Companydata,MorganStanleyResearch

Morganstanley

RESEARCH

IDEA

KeyChartsandExhibits

Exhibit1:Orderofpreference:GCmemory

Source:FactSet,MorganStanleyResearch(e)estimates.PricingasofApril27,2026.

MoRGANSTANLEyREsEARcH3

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Exhibit2:Macronix1Q26earningsresults

P/LComparison(NT$mn)

1Q26

1Q25

4Q25

1Q26

Q/Q

Y/Y

MSe

Diff

Netsales

6,137

7,729

10,469

35%

71%

8,973

17%

Grossprofit

1,087

1,868

4,271

129%

293%

3,020

41%

Operatingprofit

-1,082

-392

1,933

660

193%

Pretaxprofit

-969

-302

2,066

583

255%

Netprofit

-873

-295

1,776

492

261%

EPS(NT$)

-0.47

-0.16

0.90

0.26

242%

Keyratios(%)

Grossmargin

17.7%

24.2%

40.8%

16.6ppt

23.1ppt

24.7%

16.1ppt

Operatingmargin

-17.6%

-5.1%

18.5%

23.5ppt

36.1ppt

-2.1%

20.5ppt

Pretaxmargin

-15.8%

-3.9%

19.7%

23.7ppt

35.5ppt

-2.8%

22.6ppt

Netprofitmargin

-14.2%

-3.8%

17.0%

20.8ppt

31.2ppt

-2.4%

19.4ppt

Source:Companydata,MorganStanleyResearch

Exhibit3:NORflashdemandandsupplygrowthrates

Source:Companydata,MorganStanleyResearch

Exhibit5: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

Exhibit7:Quarterlysupplybreakdown(mnGb)

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

SamsungHynixMicronCXMTNanyaWinbondPSMCJHICC

Source:MorganStanleyResearch(e)estimates

Exhibit4:NORflashdemandgrowthandsupplygrowthbydensity

Source:Companydata,MorganStanleyResearch

Exhibit6:Quarterlyoversupply/undersupplyratiovs.NanyaandWinbondpricingQ/Qchange

Source:MorganStanleyResearch(e)estimates

Exhibit8:Quarterlydemandbreakdownbyproduct(mnGb)

30,000

25,000

20,000

15,000

10,000

5,000

-

1Q233Q231Q243Q241Q253Q25e1Q26e3Q26e

SmartphonePCServerTVSwitchCacheDRAMOthers

Source:MorganStanleyResearch(e)estimates

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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

IDEA

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

——Spot——Contract

30.00

Source:DRAMeXchange,MorganStanleyResearch;dataasofMar13,2026

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APMemory:Bottom-upAnalysisforIPDBusiness;IntelEMIBOpportunity

AccordingtoIntel(coveredbyJosephMoore),tofurtherstabilizepowerdelivery,IntelFoundryintegratesembeddeddeeptrenchcapacitors(eDTC)forultra-highcapacitancedensityclosetotheload,therebyflatteningPDNimpedanceacrossthebasedie.

EmbeddedMIM(eMIM-T)technologydeliverssuperiordecouplingatthebasedie,

leveragingthesameadvancedarchitectureasOmniMIMevenonmaturenodes.For

precise,high-speedpoint-of-loadregulation,CoaxMILtechnologyembedsmagnetic

inductorsintothesubstrate,enablingintegratedvoltageregulators(IVRs)withrapid

responseandminimalloss.Together,thesetechnologiesformascalablepowerdeliveryfabricthatkeepspacewithrisingcomputedensity.WebelievetheseeDTCareIPD

productsthatAPMemoryprovides.

Exhibit13:AnexampleofIntelFoundry’spowerdeliverysolutionshownatIntelDirectConnect2025,showcasingforward-lookingplansforincreasedeMIM-Tcapacity;wethinkthisisadoptingAPMemory'sIPD,whichistheeDTChere

Source:Intel

Exhibit14outlinesourestimationforprojectedcontributionstoAPmemoryrevenues

from2026to2028acrossIPD'scustomer.Humufishisexpectedtoship~2millionTPUsat100IPDperchip,generatingabout$160million(NT$4.8billion)inrevenue,asweneedtoconsidertheyieldrate.ChinaAIGPUdemandgrowssignificantly,withtotalshipmentsrisingfrom1,992kunitsin2026to4,966kin2028,ledbyvendorssuchasHuawei,

Cambricon,andT-Head,drivingrevenuefrom$40millionto$168million(NT$1.2billiontoNT$5.0billion).Broadcom’sTomahawk6CoWoSbookingscontributearound$69

million(NT$2.07billion)in2026e.Altogether,totalIPDrevenuecontributiontoAP

memoryisprojectedtoincreasefromNT$3.27billionin2026toNT$10.04billionby

2028,reflectingstronggrowthdrivenprimarilybyChina’sAIGPUexpansionandsteadycontributionsfromnetworkingandspecializedapplications.

MoRGANSTANLEyREsEARcH7

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Exhibit14:Bottom-upAnalysisforIPDBusiness

2026

2027

2028

Humufish

TPUv102nmHumufishshipment(kunits)

2,000

IPDperchip

100

HumufishIPDnumber(mnunits)

200

IPDASP(US$)

0.8

RevenuecontributionfromHumufish(US$mn)

160

RevenuecontributionfromHumufish(NT$mn)

4,800

ChinaAIGPU

TotalChinaGPUshipment(kunits)

1,992

3,550

4,966

Huawei

900

1,500

2,100

Cambricon

280

440

600

Hygon(GPUonly)

130

170

270

MetaX

75

115

140

T-Head(GPUonly)

250

450

550

Kunlun

130

270

340

MooreThread

40

85

120

Biren

27

85

125

IluvatarCoreX

100

250

380

Enflame

40

55

71

BytedanceASIC

20

130

270

IPDperChinaGPUchip

40

45

45

IPDASP(US$)

0.5

0.8

0.8

RevenuecontributionfromChinaGPU(US$mn)

40

120

168

RevenuecontributionfromChinaGPU(NT$mn)

1,195

3,594

5,028

Broadcom

Tomhawk6CoWoSbooking(kunits)

23

IPDRequiredperCoWoSWafers

1

IPDInterposerASP(US$k)

3

RevenuecontributionfromTomhawk(US$mn)

69

RevenuecontributionfromTomhawk(NT$mn)

2,070

Others

Others(e.g.NRE;NT$mn)

62

2,170

226

TotalIPDRevenueContributiontoAPMemory

3,265

3,594

9,828

Source:Companydata,MorganStanleyResearchestimates

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Macronix:EarningsEstimateRevisions

Weraiseour2026/27/28EPSforecastsby25%/6%/9%:Wefactorin1Q26results.WecontinuetobelieveMLCandlegacyTLCNANDwillfaceadeepershortagesinto2H,withundersupplylikelyrisingto~40%.Globalcapacityfor2GBto64GBNANDhaslargely

disappeared,andcustomerinventorygenerallylastsonlyanother6–9months.Macronixremainstheonlysupplierabletofillthegap.WeexpectMLCandlegacyTLCpricingtorisemorethan200%from1Q26to4Q26.

WeexpectNORFlashpricingtorise20–30%in1Q,withfurtherupsidein2Q,andvisibilityforcontinuedhikesnowextendinginto2H26.WealsoexpectglobalmainstreamvendorstoreduceNORcapacity.DemandforlegacyROMshouldstrengthenastheNintendo

Switch2ramps.

Afterrevisions,our2026/27/28EPSforecastsareNT$7.35/20.82/21.42vs.FactSet

consensusofNT$12.94/27.43/41.02,aswecontinuetomonitorthepricingtrendsofMLCNAND.

Exhibit15:Macronix:EarningsEstimateRevisions

Source:Companydata,MorganStanleyResearch(E)estimates

Exhibit16:Macronix:BVPSEstimateRevisions

Source:Companydata,MorganStanleyResearch(E)estimates

MoRGANSTANLEyREsEARcH9

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Exhibit17:Macronix:Quarterlyfinancials

Source:Companydata,MorganStanleyResearch(E)estimates

10

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Macronix:ValuationMethodology

WekeepourPTunchangedatNT$202:WecontinuetouseaP/Bmultiplemethodologytoderiveourpricetarget,inlinewithourapproachforGreaterChinamemoryIDMpeersandinviewoftheindustry'shighvolatility.Historically,forwardP/Bhashadasimilar

trendvs.ROAE.Wecontinuetoexpectthestockwilltradeupto7.0x2026eBVPS(sameaspriorP/Btarget)vs.itshistoricalaverageof1.5xsince2017.WecontinuetobelievethehigherthanhistoricalaverageP/Btargetisjustifiable,asTheMLCandlegacyTLCNANDcouldbeingreatershortageinto2H26,withundersupplyeasilygoingupto40%.The

onlysupplierwhichcouldfillthegapremainsMacronix,whichweexpectwillenjoy

significantpricingupsideofover200%from1Q26to4Q26,drivingearningsupside.WithverylimitedchangesinBVPSfor2026e,ourbasecasePTremainsunchangedNT$202.

Exhibit18:ForwardP/Bvs.ROAE

Source:Factset,MorganStanleyResearch

Exhibit19:Macronix:Earningsestimaterevisionbreadth

2500%

1.5400%

1300%

0.5200%

0100%-0.50%

-1-100%

Jan-16Jan-17Jan-18Jan-19Jan-20Jan-21Jan-22Jan-23Jan-24Jan-25Jan-26MacronixFY2EPSRevision(3MMA)Sharepriceperf.(YoY,RHS)

Source:Companydata,MorganStanleyResearchestimates

MoRGANSTANLEyREsEARcH11

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RiskReward–MacronixInternationalCoLtd(2337.TW)opPick

TopPick;OWonlegacyFlashopportunities

PRICETARGETNT$202.00

Basecase,P/B,inlinewithourGreaterChinamemorycoverage,duetothememory

industryıscyclicalnature.Weapplyatargetmultipleof7.0xtoour2026BVPSestimate,vs.itshistoricalaverageof1.5xsince2017.WecontinuetobelievetheP/Btargetisjustifiable,asTheMLCandlegacyTLCNANDcouldbeingreatershortageinto2H26,withundersupplyeasilygoingupto40%.TheonlysupplierwhichcouldfillthegapremainsMacronix.

ConsensusPriceTargetDistribution

Source:Refinitiv,MorganStanleyResearch

NT$170.00

NT$42.00令◆NT$300.00

MSPT

MeanMorganStanleyEstimates

RISKREWARDCHART

NT$326.00(+124.83%)

NT$202.00(+39.31%)

NT$119.50(-17.59%)

0

APRı25OCTı25APRı26APRı27

TWD

320

240

160

80

NT$145.00

Key:HistoricalStockPerformanceCurrentStockPricePriceTarget

Source:Refinitiv,MorganStanleyResearch

OVERWEIGHTTHESIS

.TheMLCandlegacyTLCNANDcouldbeingreatershortageinto2H26,withundersupplyeasilygoingupto40%.Theonly

supplierwhichcouldfillthegapremains

Macronix.ThepricingforMLCandlegacyTLCcouldcouldriseover200%from1Q26to4Q26

.Weexpectlow-single-digitNOR

undersupplythroughout2026,drivenbycapacitycannibalizationfromotherhigh-marginproducts.

.ROMmaybenefitfromtheNintendo

Switch2,whichstartedsellinginJune2025.

.WeviewthecurrentP/Bvaluationasattractivegiventhestrongnear-termoutlook.

ConsensusRatingDistribution

89%Overweight0%Equal-weight11%Underweight

MSRating

Source:Refinitiv,MorganStanleyResearch

RiskRewardThemes

PricingPower:Positive

SecularGrowth:Positive

ViewdescriptionsofRiskRewardsThemeshere

NT$326.00

BULLCASE

11.4x2026eBVPS

HigherthanexpectedpricehikeforlegacyNAND,andsignificantpricehikeforNORthroughout2026:NANDrevenuegrows1000%+,andNORflashrevenuegrows110%+Y/Yin2026.

NT$202.00

BASECASE

7.0x2026eBVPS

SignificantpricehikeforlegacyNAND,andcontinuedpricehikeforNORthroughout

2026:NANDrevenuegrows641%,andNORflashrevenuegrows96%Y/Yin2026.

NT$119.50

BEARCASE

4.2x2026eBVPS

ModeratepricehikeforlegacyNAND,and

flattishpriceforNORthroughout2026:

NANDrevenuegrows<150%,andNORflashrevenuegrows<80%Y/Yin2026.

12

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RiskReward–MacronixInternationalCoLtd(2337.TW)

KEYEARNINGSINPUTS

Drivers

2025

2026e

2027e

2028e

NORFlashpricing(NT$)

1,728

2,783

3,256

3,256

ROMsales(NT$,mn)

5,712

3,887

3,808

4,119

NANDsales(NT$,mn)

3,705

27,459

92,068

97,771

INVESTMENTDRIVERS

·NORpricingtrend·SLCNANDpricing

·Peers'productionexpansion

GLOBALREVENUEEXPOSURE

0-10%

0-10%

0-10%

0-10%

20-30%

20-30%

20-30%

EuropeexUKlndia

NorthAmericaUK

APAC,exJapan,Mainland

ChinaandlndiaJapan

MainlandChina

Source:MorganStanleyResearchEstimateViewexplanationofregionalhierarchieshere

MSALPHAMODELS

2/53MonthMOSTHorizon

Source:Refinitiv,FactSet,MorganStanleyResearch;1isthehighestfavoredQuintileand5istheleastfavoredQuintile

RISKSTOPT/RATING

RISKSTOUPSIDE

·WiderlegacyNANDsupply/demandgap

·NORup-cycle,drivenbylimitedsupply

expansionand/orstrongerdemand

·FastergrowthforSwitchhardwareandcoretitles

RISKSTODOWNSIDE

·LessseverelegacyNANDsupply/demandgap·NORdown-cycle,drivenbyfastersupply

expansionand/ordemandweakness

·SlowergrowthforSwitchhardwareandcoretitles

OWNERSHIPPOSITIONING

Inst.Owners,%Active48.4%Source:Refinitiv,MorganStanleyResearch

MSESTIMATESVS.CONSENSUS

FYDec2026e

Sales/Revenue

(NT$,mn)

39,678

66,682

70,487

111,712

EBITDA

(NT$,mn)

9,833

24,507

24,679

32,847

Netincome

(NT$,mn)

3,985

14,478

21,633

49,046

EPS

(NT$)

2.15

7.35

11.40

25.39

MeanMorganStanleyEstimatesSource:Refinitiv,MorganStanleyResearch

MoRGANSTANLEyREsEARcH13

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Macronix:FinancialSummary

Exhibit20:FinancialSummary

Source:Companydata,MorganStanleyResearch(E)estimates

14

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APMemory:EstimateRevisionsSummary

Weraiseour2027/28EPSestimatesby3%/16%:WefactorinincreasedIPDrevenue

contributionduetoastrongeroutlook.Wealsoestimatehigherpricingforwafer-on-wafermemory.Incomparison,FactSetconsensus2026/27/28estimatesareNT

$13.11/23.93/32.47.OurstrongerEPSforecastsreflectourmoreconstructiveviewontheIPDshipmentoutlook,webelieve.

Exhibit21:APMemory–Estimaterevisions

Source:Companydata,MorganStanleyResearch(e)estimates

Exhibit22:APMemory–Quarterlyfinancialsummary

Source:Companydata,MorganStanleyResearch(e)estimates

MoRGANSTANLEyREsEARcH15

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APMemory:ValuationMethodology

WeraiseourpricetargettoNT$1,000fromNT$777tofactorinourearningsestimatechanges.Wealsoliftourintermediategrowthratefrom12.8%to14.3%aswefactorintheIntelEMIBopportunityforAIinthelongrun.

Asidefromintermediategrowth,ourotherresidualincomemodelassumptionsare

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

premium,1.2beta);2)payoutratioof67%;and3)terminalgrowthrateof3%tobemoreinlinewiththelong-termmacrogrowthrate.OurnewPTimplies2026eP/Eof62xand2027eP/Eof37x–morethan1s.d.abovethehistoricalaveragesince2020.OurbullandbearcasevaluesrisetoNT$1,175(fromNT$1,145)andNT$400(fromNT$376),

respectively.

Exhibit23:APMemory:ResidualIncomemodel

Source:Companydata,MorganStanleyResearch(e)estimates

Exhibit24: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

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Exhibit25: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

MoRGANSTANLEyREsEARcH17

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RiskReward–APMemoryTechnologyCorp(6531.TW)

OWonIPDandWoWopportunities

PRICETARGETNT$1,000.00

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

67%;3)terminalgrowthrateof3.0%;and4)medium-termgrowthrateof14.3%.

RISKREWARDCHART

NT$1,175.00(+56.04%)

NT$1,000.00(+32.80%)

NT$400.00(-46.88%)

0

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

TWD

1000

750

500

250

NT$753.00

Key:HistoricalStockPerformanceCurrentStockPricePriceTarget

Source:Refinitiv,MorganStanleyResearch

OVERWEIGHTTHESIS

.IPD(interposersanddiscretes)revenueislikelytorampin2026-27,andbefurther

drivenbynewIPDinterposeropportunitiesinto2028.

.Memorybandwidthandpower

consumptionarethenextissuestobe

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

.Thecompanyexpectsmemorybusinesstobestableinthenearterm.

.OverallAIbusinessshouldcontinuetoriseinthemix–apositivereadforthemarginprofile.

.OurPTimplies62x2026eP/Eand37x2027eP/E-morethan1s.d.abovetheaveragelevelsince2020.

ConsensusRatingDistribution

100%Overweight0%Equal-weight0%Underweight

MSRating

Source:Refinitiv,MorganStanleyResearch

RiskRewardThemes

SecularGrowth:Positive

TechnologyDiffusion:Positive

ViewdescriptionsofRiskRewardsThemeshere

NT$1,175.00

BULLCASE

73x2026eEPS

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$1,000.00

BASECASE

62x2026eEPS

Fast-growingAIandIPDbusiness,with

PSRAMgeneratingstablecashflows:We

expect:1)WoWrevenuetoreachNT$6.3bn,andIPDrevenuetoreachNT$10bn+by

2028;2)totalrevenuetoriseata58%

CAGR,2025-28;and3)grossmarginto

increasefrom46.5%in2025toover52%in2028.

NT$400.00

BEARCASE

25x2026eEPS

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.

18

Morganstanley

RESEARCH

IDEA

RiskReward–APMemoryTechnologyCorp(6531.TW)

KEYEARNINGSINPUTS

Drivers

2025

2026e

2027e

2028e

1.WifiSales(%)(%)

73.7

55.7

39.2

26.1

2.EthernetSales(%)(%)

7.1

8.7

20.5

28.5

INVESTMENTDRIVERS

·DemandforAIapplications