Value Investing: Latest Industry Research Report – Powerchip (6770-TW) Memory Foundry Price Hike, 3D AI Wafer Foundry Opens New Growth Opportunity

Despite a sharp intraday market decline, Powerchip (6770-TW) maintained its upward momentum, demonstrating strong resilience. Rising memory prices and tight logic foundry capacity have driven a clear turnaround in core operations. Previously pressured by economic cycles and inventory adjustments, Powerchip is now seeing synchronized improvements across memory foundry, logic foundry, and 3D AI wafer foundry, resulting in much clearer operational visibility than before.

Capacity utilization is another key indicator. Powerchip shipped 422,000 wafers in Q2, achieving approximately 87% utilization. With memory and logic foundry orders continuing to strengthen, capacity utilization is expected to remain fully loaded from Q3 to Q4. If pricing continues to rise, both revenue and profitability are likely to improve sequentially.

Currently, Powerchip’s most direct growth driver is memory foundry. Memory foundry now accounts for about 52% of total revenue. Strong AI demand has led cloud service providers to aggressively pre-book capacity, tightening DRAM supply. The company raised memory foundry prices significantly in July, with the increases expected to gradually reflect in revenue by year-end.

Process upgrades are also progressing steadily. Powerchip’s self-developed 1X-nanometer process entered small-volume production in June and is scheduled for mass production by 2027. A next-generation process tool developed in collaboration with Micron is set to arrive in Q1 2027, targeting mid-2028 for volume production. This indicates Powerchip is not only benefiting from short-term price hikes but also advancing toward more efficient and competitive manufacturing processes.

NAND flash is another area worth watching. As international giants shift capacity to high-end 3D NAND, supply of traditional small-capacity flash memory has tightened, while rigid demand from networking and industrial control sectors remains strong. Powerchip has transitioned its related foundry nodes to the more cost-competitive 24-nanometer process, enhancing product competitiveness.

On the logic foundry side, Powerchip is benefiting from tight supply. Q3 order demand already exceeds available capacity, prompting the company to raise prices across both 8-inch and 12-inch logic foundry services in July. Rising power demands from AI servers are increasing the need for power management ICs, discrete components, and power devices. Powerchip is increasing shipments of high-margin PMICs and MOSFETs while reducing exposure to low-margin display driver and sensor foundry services.

In the medium to long term, Powerchip’s most promising growth area is 3D AI wafer foundry. Revenue contribution rose from 3.2% in Q1 to 5.4% in Q2, with a target to reach 20% within three years. If successful, this would shift Powerchip’s product mix from traditional foundry toward high-margin advanced packaging and specialized wafer services.

Wafer stacking technology is also progressing. Powerchip has completed customer validation for 4-layer wafer stacking, and 8-layer memory stacking test runs show promising yield improvements. The company plans to advance toward 12-layer stacking. If this technology matures, it could open new applications in low-power, high-density memory.

Powerchip’s backend HBM (High Bandwidth Memory) foundry contract with Micron will extend to 2030. The company plans to complete pilot line setup by year-end and begin mass production in Q4 2027. If on track, this will become a key source of high-margin revenue.

Key future watchpoints for Powerchip include whether price hikes can continue, capacity remains fully loaded, and 3D AI wafer foundry can steadily increase its revenue share. If these three areas progress smoothly, Powerchip could transition from a cyclical downturn to a new growth cycle in memory and specialty wafer foundry. To receive timely stock alerts on undervalued opportunities, join Professor Qing-Long’s official LINE: enter @ai8085 or click the link below. Two free calls—during and after market hours—will help you see the present and anticipate the future.