Chih Hsin Chairman Wu Chin-Chuan warned that surging memory prices are creating mounting pressure on the notebook (NB) and consumer electronics markets. Wu stated that Q1-Q3 performance exceeded initial expectations due to customers pre-stocking in anticipation of further price increases, but customer purchasing attitudes have turned conservative as memory price trajectory diverges, with no obvious pre-Lunar New Year stocking activity observed in Q4. Wu attributed the shift to memory price increases forcing NB and consumer electronics manufacturers to raise product prices, negatively impacting terminal sales volume. The memory supply shortage was originally expected to persist until 2028, but recent delays in US AI data center construction due to power supply issues, local opposition, and permit challenges have introduced new uncertainty into supply-demand dynamics.
Memory Price Surge Drives Customer Pre-Stocking in Q1-Q3
Wu Chin-Chuan stated that memory prices have risen continuously, with customers in recent quarters generally expecting further price increases and therefore choosing to purchase in advance, even driving demand for other components. This made Q1-Q3 market performance better than initially expected at the beginning of the year. Wu noted that if memory prices stop rising in the future, customers may return to purchasing based on actual demand, and the pre-stocking effect may fade, potentially creating pressure on subsequent orders.
Wu Warns 2027 Consumer Electronics Demand May Weaken Further
Regarding the 2027 outlook, Wu stated that memory price increases have forced NB and other consumer electronics products to raise prices, thereby affecting terminal sales volume. Wu emphasized that certain low-priced electronic products face even more obvious impact than NBs because memory accounts for a higher proportion of overall costs. Wu warned that if memory prices continue to rise next year, consumer electronics demand may be weaker than this year.
AI Data Center Delays Introduce Memory Supply Uncertainty
Wu mentioned that recent US AI data center construction projects face challenges including power supply, local opposition, and building permits. Wu stated that if related engineering progress is delayed, it may affect the AI industry's demand for memory and wafer capacity, thereby reducing the crowding-out effect on other applications. Wu noted that the market previously believed memory supply-demand tension might continue until 2028, but new variables have now emerged, though it remains unclear whether conditions will actually improve.
Wafer Capacity Remains Insufficient to Meet Customer Demand
Regarding wafer capacity, Wu stated that the company's currently secured wafer capacity remains insufficient to satisfy all customer needs. Wu noted that customer demand forecasts for next year are generally higher than this year, with no obvious downward revisions observed. Wu clarified that these demands are mostly forecasts rather than formal orders, and actual purchasing may still adjust according to market changes. Wu emphasized that the key to 2027 operations remains when memory shortages and wafer capacity crowding-out conditions ease, stating that if supply chain pressure is relieved, it will have a positive impact on full-year operations, but market changes are currently too rapid to clearly determine the timing of improvement.
FAQ
What did Chih Hsin Chairman Wu Chin-Chuan say about Q4 customer behavior?
Wu Chin-Chuan stated that customer purchasing attitudes have turned conservative, with no obvious pre-Lunar New Year stocking activity observed in Q4, as customers react to diverging memory price trajectory expectations.
Why does Wu warn that 2027 consumer electronics demand may weaken?
Wu warned that memory price increases have forced NB and consumer electronics manufacturers to raise product prices, negatively impacting terminal sales volume, with low-priced electronic products facing even more obvious impact because memory accounts for a higher proportion of overall costs.
How might AI data center delays affect memory supply conditions?
Wu stated that delays in US AI data center construction due to power supply issues, local opposition, and permit challenges may reduce the AI industry's demand for memory and wafer capacity, potentially easing the crowding-out effect on other applications, though the actual impact remains uncertain.
