Nanya Technology Corp
TWSE:2408
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
Abbvie Inc
NYSE:ABBV
|
Biotechnology
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Realty Income Corp
NYSE:O
|
Real Estate
|
| US |
|
Walt Disney Co
NYSE:DIS
|
Media
|
| US |
|
PayPal Holdings Inc
NASDAQ:PYPL
|
Technology
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
44.5
79.7
|
| Price Target |
|
We'll email you a reminder when the closing price reaches TWD.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
Abbvie Inc
NYSE:ABBV
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Realty Income Corp
NYSE:O
|
US |
|
|
Walt Disney Co
NYSE:DIS
|
US |
|
|
PayPal Holdings Inc
NASDAQ:PYPL
|
US |
This alert will be permanently deleted.
Nanya Technology Corp
You don't have any saved screeners yet
[Foreign Language] Welcome to Nanya Technology's 2021 Second Quarter Earnings Conference Call. [Operator Instructions] The conference will be held only in English for investors around the world. Today's conference will be approximately 60 minutes. Nanya Technology's President, Dr. Pei-Ing Lee, will summarize our operations in the second quarter of 2021, followed by our guidance for the next quarter and key messages. And then Nanya Technology's Executive Vice President, Dr. Lin-Chin Su; Vice President, Mr. Joseph Wu; and Financial Executive, Mr. Philip Jao, will join us as we open our Q&A session. Today's presentation materials are available for download at Nanya Technology's website at www.nanya.com. As usual, we would like to remind everyone that today's discussion 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 statements. Please refer to the safe harbor notice that appears in our presentation materials. Now I would like to turn the call over to Nanya Technology's President, Dr. Pei-Ing Lee, for the summary of operations and current quarter guidance. Dr. Lee, please begin.
Okay. I'm Pei-Ing Lee. Thank you for joining Nanya Technology Q2 Investor Conference. Let me begin the presentation by describing today's agenda very briefly. We start with revenue and results, following by CapEx and bit shipment and then market outlook and then conclude by business review and outlook. Our Q2 revenue and results, our net sales, TWD 22.637 billion versus Q1 TWD 17.731 billion. Our gross profit and gross margin comes to TWD 9.583 billion at 42.3% versus Q1 at TWD 5.162 billion at 29.1%. Our operating income, TWD 7.063 billion at 31.2% versus Q1 at TWD 3.027 billion at 17.1%. EBITDA, TWD 10.895 billion, 48.1%. And it comes to net income at TWD 6.162 -- net income, TWD 6.162 billion at 27.2% versus Q1 at TWD 2.704 billion at 15.3%. Our earning per share, TWD 2 per share versus Q1 TWD 0.88 per share; and book value at the end of Q2, TWD 51.43 per share. For quarterly revenue and result, revenue Q-to-Q improved by 27.7%, year-to-year improved by 37.3%, and shipment for Q2 is relatively flat versus increased mid-single digit last year. ASP increased by approximately 30%; and exchange rate, unfavorable, 1.2%. For a little more detail, result comparison, net sales, TWD 22.637 billion versus TWD 17.31 billion (sic) [ TWD 17.731 billion ], up by 27.7%. This is mostly due to bit shipment relatively flat, but ASP increased by nearly 30%. Exchange rate, negative impact 1.2%. Our gross profit at TWD 9.583 billion, 42.3% versus Q1 TWD 5.162 billion at 29.1% with improvement of 13.2 percentage point. Q2 gross profit increased by TWD 4.421 billion, mainly due to ASP increase. Our operating expense, TWD 2.52 billion versus Q1 TWD 2.135 billion, with SG&A expense increased TWD 146 million and R&D expense increased by TWD 239 million. Operating income, TWD 7.063 billion at margin of 31.2% versus Q1 TWD 3.027 billion at 17.1%. This is mostly due to OP income increased by TWD 4.036 billion due to ASP increase. Net income, TWD 6.162 billion at 27.2% margin compared to Q1 TWD 2.704 billion at 15.3 percentage point, improvement of 11.9 percentage point. The net income increased by TWD 3.458 billion mostly due to OP income increase, TWD 4.36 -- TWD 4.036 billion with exchange rate unfavorable by TWD 408 million. Income tax, unfavorable by TWD 127 million Q-to-Q comparison. This chart basically summarize our quarterly financial highlights for the past few years. There are full information here, whereas the blue bar indicated revenue, the green bar indicated net income and the blue line indicated gross margin and the dark blue is operating margin, okay? We're seeing that for this quarter with improvement of revenue to TWD 22.637 billion and the net income increased to TWD 6.162 billion, whereas the gross margin come up to 42.3% and our OP margin come up to 31.2%. Our operating expense for Q2 at TWD 639 million and R&D expense, on the right-hand chart here, comes to TWD 1.882 billion. This is due to increase in 10-nanometer class technology and product development expense. For the cash flow report here, for our Q2, our beginning cash balance is at TWD 59.113 billion with the cash from operating income, TWD 10.552 billion (sic) [ TWD 10.556 billion ] and capital expenditure, TWD 1.233 billion and financial activity, minus TWD 847 million, okay, with the net end balance at TWD 67.588 billion with a free cash flow, TWD 9.323 billion. For the first half, beginning balance at TWD 51.726 billion and the end balance, TWD 67.588 billion. And the net change is coming from cash from operating activity for TWD 18.944 billion; and capital expenditure, negative TWD 2.718 billion; and financial activity, minus TWD 364 million. On the CapEx and bit shipment, we are targeted to spend TWD 15.6 billion for this year. And for Q1 and Q2, we spent TWD 1.5 -- TWD 1.2 billion. And most of the expenditure will come in Q3 and Q4 in preparation for our 10-nanometer production, okay? And bit shipment on the right-hand side, this year, we are targeted for flat to marginally up, okay? And we've seen that Q2 bit shipment relatively flat. And we estimate Q3 bit shipment will be slightly down in single digit, okay? And for year-to-year shipment, expected to be flat to marginally increase. And we had make announcement that we will be doing new fab construction in New Taipei City, which is near by our current fab, and we will invest approximately TWD 300 billion. And investment plan will take 3 phases within 7 years, and we'll be using different generation of 10-nanometer class process technology. And total capacity after the whole phase, the all 3 phase, approximately 45,000 wafers per month. And the schedule for the first phase is to start at 2024 for the first phase. For the market -- outlook for the market. The global economic recovery is favoring DRAM demand growth. And Q3, we're seeing consumer electronics, server market and PC demand continue to be healthy and also 5G smartphone penetration increasing. And on the cautious side, okay, basically, we are cautiously optimistic that -- for the outlook and the component supply shortage may slow down PC and server shipment. And also COVID-19 situation may defer economic recovery, okay? On the supply side, we are observing that second half DRAM supplier CapEx increase mainly for new fab construction and EUV equipment purchase, and shipment increasing for high-density DRAM products. For Q2, DRAM supplier inventory still at relatively low. From a demand point of view, mobile market, smartphone regain annual growth and 5G penetration reaches 40%. And we're seeing that high-end shipment increasing, improving, while mid- to low-end sluggish in developing countries. For the server market, expansion of corporate IT spending and a new platform introduction with the high DRAM content contributing to strong server DRAM demand in second half this year. For PC market, enterprise PC and notebook demand still strong, year-to-year growth expected. However, component shortage issue may delay shipment in second half this year. For the consumer market, positive outlook for digital TV, networking, wearable devices, hard disk, SSD, IP camera, game console and automotive electronics, et cetera. For business review and outlook, we have shown improved Q2 financial result, and we've seen positive Q3 market outlook. For our 10-nanometer generation, first generation, we start 8-gigabit DDR4 and DDR5 are piloting. And second 10-nanometer class product development is on track. And we have made an announcement, a new DRAM fab construction is planned for first phase production by 2024 and will take 7 years to construct the whole phase. No impact on business operations by COVID-19. And for this year's AGM date has to be rescheduled to August 4 due to governmental authority order as a result of COVID situation in Taiwan. Our Board has approved dividend distribution of TWD 4 billion, which will be subject to AGM approval in August 4. This conclude my presentation to you. Now followed by your question.
[Operator Instructions] The first to ask question, Charles Ling, Crédit Suisse.
This is Haas at Crédit Suisse. Dr. Lee and Joseph, congratulations on the good results. I would like to ask my first question about the bit shipment and also your pricing outlook in second half of this year. So could you explain more in detail about the bit shipment decline in 3Q? Because I would expect that you still have some inventory on hand to [indiscernible] those through second half. And would it be possible if you can provide more color on why the bit shipment will be declining in 3Q? And also on the pricing, following your 30% price surge in second quarter this year, what is your expectation for the pricing outlook in the second half? And will you be able to maintain the price and also maintain your gross margins at above 40% levels through second half?
Okay. The first question is regarding to shipment in Q3. We are not expecting further growth, okay? We're expecting that we may even have a slight lower shipment, okay? That's the result of -- we had -- our capacity has reached its limit, okay? And also our inventory has been depleted, okay? So we are reaching very low inventory level, okay? And your second question is the price outlook, okay? And our expectation is that we are seeing Q3, there's a good opportunity that both the quarterly contract price as well as the monthly price has an opportunity to continue to improve, okay? In terms of external improvement, we have to watch very closely on the further development. But at this time, it's optimistically saying that we'll continue to improve.
Okay. Just a quick follow-up. Could you provide like the magnitude of these products, including commodity, consumer and also mobile? Which product line do you think has the most upside in terms of pricing in 3Q and 4Q?
Okay. If I may go back to Q1 and Q2 first, okay? In Q1 and Q2, we've seen the more upside improvement on DDR3 consumer side. And as we move into the second half, we're expecting that DDR4 are being gradually catching up, okay, on the pricing point of view, okay?
Okay. So my second question is about your CapEx and also your new fab update. So it seems you only spent TWD 2.7 billion out of your annual CapEx target of TWD 15.6 billion. Do you think you may [ understand ] for the budget for the full year? And also, could you provide the breakdown for the CapEx for your new fab, which schedules to ramp from 2024. And is the total USD 1 billion spending for 45,000 wafers per month capacity will imply around USD 200 million CapEx per 1,000 wafer per month capacity expansion?
Your question is related to CapEx, okay? We spend relatively small number, small CapEx first half. And yes, most of the CapEx will be mostly in second half, okay? And so far, we are expecting that is on schedule, okay? We are targeting to spend near our original plan.
Okay. And a follow-up on the new fab CapEx. The implied USD 100 -- USD 1 billion spending for 45,000, which implies USD 200 million per 1,000 wafer per month capacity, maybe you can give us more idea about which [ note ] or what you expect to spend in the new fab and also whether it is a right computation that USD 200 million per 1,000 wafer per month capacity is the right assumption.
That's including our preparation for EUV facility and e-commerce.
Okay. Could you provide a rough breakdown of the CapEx of TWD 30 billion?
You mean the...
For the new fab, TWD 30 billion CapEx.
Basically, the -- yes, I didn't think -- I didn't figure out why it's TWD 30 billion. I thought if it's TWD 30 billion, it will be a lot, very easy. Yes. Okay. So that sort of called me -- but in any case, we will spend TWD 300 billion over 7 years, okay? And in the beginning, first couple of years will be mostly construction, okay, not the equipment, and then followed by 3 phases of the equipment implementation, okay? And also, in addition to that is we plan for EUV facility, okay? So exactly, the precise number -- we still don't have the precise number to disclose to the market yet, okay? But we are looking to our -- the market demand situation, our customer demand situation to make adjustment over the next 7 years.
Okay. That's very clear. Congratulations again.
Next one to ask questions, J.J. Park from JPMorgan.
First question is that your new capacity coming on stream in the 2024 at the earliest. So what's the bit shipment growth in the next 3 years just based on the tech migration? Do you expect the [indiscernible] bit shipment growth just from the tech migration where you expect flattish bit shipment growth onto the new capacity coming on stream into 2024? And then I have a follow-up question.
Okay. Your question is our new fab will be ready 2024, okay? And what's next 3-year big growth coming from. The next 3-year big growth will come in from our current facility, okay? We still have small area remain for the current facility. On top of that is that we plan to convert a portion of current production in more legacy technology into the future technology. And the big growth will come from the technology migration.
So is it a concern that you still have the certain bit shipment growth in the next 2 to 3 years just from the tech migration?
I'm not sure it's big, okay? JJ, I hope it's bigger than I can deliver. But I would say it's not going to be very significant, but it -- we will have some growth. We could be still under market demand growth situation.
Okay. The other question is that I think we have a good visibility for the price outlook in the third quarter, but this is a concern of us that Q4 price outlook, given potential downside risk, should key applications such as PC, software [indiscernible] of smartphone. What about the, like, your view on the Q4 price outlook? Are you still looking at the [ transfer ] into the Q4 where there's some risk to the Q4 price outlook?
I wouldn't explain that as a concern, okay? Current market outlook still optimistic, okay? And as I say, I'm putting it into cautiously optimistic by indicating that there could be some topic we have to be -- watch carefully, including the supply chain shortage on different components, okay, and also COVID situation, those factors, okay? And with the Q4 situation, I'm not expecting it to be a negative downside situation. If we look into the current outlook, I'm still expecting Q4 to be favorable in terms of pricing, particularly for DDR4, okay? And so that's what I can tell right now, okay? But the -- what's the extent of price change still need to be watched closely on those favorable market demand point of view as well as inventory low point of view versus the market change, dynamic change.
Now we are having Jeff Ohlweiler from Macquarie for questions.
Can you tell me -- SG&A expenses had a big jump Q-on-Q in the second quarter. Is that because of higher profitability and, therefore, higher bonus expense? Or what's really the Q-on-Q jump in the SG&A expenses?
SG&A expenses, our expenses is our core structure actually is a -- changed over quarter-by-quarter, as you probably observed. ASP also increased. The ASP increase is a result for -- from net price increase plus also the product portfolio, okay? You know that we have been delivering to the market various product density and different products. Like for instance, DDR3, we may have 4 gigabit, 2 gigabit 1 gigabit or even down to 5, 12 megabit. And DDR4, we have 16 gigabit, 8 gigabit, 4 gigabit, et cetera, okay? And low power, we also have all kinds of different density. And with all the different density product portfolio combination may include more assembly and testing, okay? For instance, for 1 gigabit, when you calculate into equivalent 4 gigabit, you will have full assembly and also for testing, okay? And if the pricing is increasing by TWD 0.01 versus 4 gigabit is increased by TWD 0.04, so both factor was there, okay? So for the expenses-wise, we are seeing for those product portfolio topic. Also with our profit being more, we also reserve more expenses for employee bonus. On top of that, we're also seeing some exchange rate unfavorable increasing our costs as well.
Okay. Great. And then second question, you talked about maintaining a 50% payout ratio for your operating profit for [ ad ] and dividends. With your high CapEx plan going forward over the next 7 years, is that 50% payout ratio at risk? Or are you going to try to maintain that as best as you can?
So far, we're still targeted for that policy, okay, at 45% or so, okay? And we're still targeting for that policy, okay? And with the current cash flow situation we have, we are okay for the next few years, okay, without have to take any interest-bearing loan. And today, we don't have any interest-bearing loan.
Next one, we have Stanley Wang from SinoPac Securities.
Could you give us your revenue breakdown by region? And your China competitor is vested on ramping up their capacity, while we are constrained by our capacity and process migration. So are we facing some market share loss recently?
Your question is our product portfolio or our sale region?
Sales region.
We don't describe detailed sales region, okay? In general, we sell into worldwide, including the Taiwan, Mainland China. We also sell into Japan, U.S.A. as well as the Europe. And we are quite well distributed around the world.
Okay. So -- and how about your competitors in China?
Our competitor in China, in generally speaking, all 3 supplier in China is our competitor in China, okay? And if you're interested in China specific, we probably accounted for our 20% plus/minus.
Now next one to ask questions, Simon Woo from Bank of America.
Okay. Great. Congrats on great results. But another tricky thing is very exceptional ASP hike in second quarter. 30% quarter-on-quarter increase is very exceptional. So could you share some color -- maybe 2 gigabit, 4 gigabit price hike should be much, much higher than 30% versus the 8 gigabit maybe teens level. We get any color how you [ going to make ] the 30% ASP hike? And then the follow-up question.
I don't have a specific number for you on specific. I just like to reiterate my comment in the last couple of questions is that ASP improvement for us contributed both by DDR3 and DDR4 and low power, okay? But DDR3 contributed more. And also, what contributed even more is that lower density portion, okay? As I indicated that for lower density, the ASP increase is modified by several times. And when you count to equivalent 4 gigabit, the percentage is relatively high. And that's including also -- built in with additional 3 assembly, additional 3 testing inside the ASP.
Yes, yes. That's great. How about vis-a-vis -- or maybe you revisit the second quarter revenue volume in terms of the bit. What should be the rough idea, the mix, DDR3 versus DDR4?
It's about -- DDR3 is about -- it's about half, okay? DDR4 -- approximately, DDR3 may be slightly more than half, and one is [ steady ] less than half -- approximately half. And we are expecting this ratio remains pretty much similar, okay? And of course, this ratio change, all depends on customer demand. We will make adjustments according to customer requests, okay? And at this time, we've seen that it's around 50% [indiscernible].
In terms of the revenue, right, rather than the [ book ]...
The pricing actually pretty much similar, with DDR4 may be still slightly higher. Yes.
Now I'm feeling that the DDR3 price probably is much, much higher than DDR4, no?
No, no, that's because of DDR3 used to be lower priced. Okay.
But the mix, the half and half of mix in terms of the revenue you're saying?
Yes. If you're talking about -- yes, I'm sorry, Simon, I may say this a little bit incorrect. If you're talking about per density, lower density now in terms of the pricing actually is favorable compared to higher density, okay? And if you're talking about equivalent 4-gigabit DDR3 versus 4-gigabit DDR4, the pricing is not very much different, okay? But for 2 gigabit, then there's very little DDR4, only DDR3 in the market, okay? And 1 gigabit also DDR3 in the market. And that's why the DDR3 is making more significant impact on ratio that you're seeing.
Yes. Yes. The second quarter revenue mix anyway, DDR3 a little bit higher than 50% and then DDR4 a little bit lower than 50%.
In combined, it's probably similar, okay, in percentage-wise, 50 percentage Yes.
Okay. And then the one surprise that shows 30% sudden increase, quite strong increase quarter-on-quarter, you don't see any kind of a correction? Maybe -- you pointed out price increase -- price of 30% here, but in terms of the blended ASP-wise, you don't see any -- the downside risk going forward?
I don't see significant downside risk, okay? But I see we have to be cautiously optimistic. We cannot be too much optimistic, okay? From a demand point of view is I describe that the server market is okay. Even the PC market is okay, okay? And the consumer market is pretty healthy, okay? And the mobile market I see in the high end is actually reasonably good, with the middle and low end could be something to be more careful, okay? But usually, middle end and high end was in developing countries. And the development country tend to be forecast in a very aggressive way, okay? It means that they usually forecast yearly growth in a very, very significant percentage. And as they've seen that market is not meeting the expectation, they're making adjustment. Usually, that adjustment also very significant, okay? So overall speaking, I'm seeing the market to be optimistic, but we have to be cautioned on a few things like supply chain component issue and COVID-19 situation.
Yes. So you stated that your OEM customers, particularly the smartphone OEM customers, their memory, the DRAM inventories, about the OEM customers, is not really high. That's why they need -- they ask more and more shipment for second half [indiscernible].
At this time, the supply side inventory are quite healthy. Actually, it's in the low point. And from the channel and customer side, we still don't see significant buildup inventory issue that may be causing a concern yet, okay? But we'll continue to look into closely on the topic.
Congratulations again.
[Operator Instructions] And the next one to ask questions, Charlie Chan, Morgan Stanley.
Congratulations on great results. So my first question is about -- in the last cycle, your gross margin can approach or exceed 50%. And do you think based on the current industry situation, your cost structure, do you think you can reach a 50% gross margin again, I mean, in this cycle?
Charlie, I think -- I hope there's a potential opportunity for that, okay? These are cautiously optimistic.
Okay. By this year or do you think it has to be next year?
That I don't know for sure yet, okay? But it may come sometime in the next few quarters, okay?
Okay. Okay. That's very helpful. Yes. So I'm wondering -- yes, because our team has this spot market versus the contract price premium, right? So there was a very quick change from March, with 80% premium spot price and now it's around 25%. So in the coming months, do you think the contract price will continue to catch up or the spot price of DRAM will go down?
If you're looking back for the last month or so, you've seen the spot price -- spot market actually come down a little bit, okay? And you're likely to observe that contract price for the quarter, for the month, particularly for the DDR4, will be moving up, okay? As the contract price move up, then the spot market will readjust itself. And generally speaking, the market -- dominating volume still in the contract market, okay? Spot market is an indicator. However, it's a relatively small market, and also spot market is influenced by low quality of the product as well. So spot market is a little bit more dynamic than contract, okay? But in general speaking, I would say that with the contract price, if it continues to move up, spot market will make adjustment according to the contract.
Okay. Okay. So I would assume your -- majority of your [indiscernible] exposure is to the contract price, right?
Mostly are, yes, on contract market, yes. We don't -- we sell very few to -- very little to the spot.
Okay. Understood. And then next question is really based on the previous discussion with other analysts. I'm wondering, if we separate the DDR3 and the DDR4 market, for the DDR4 DRAM markets, do you see customers' inventories getting more efficient -- or sorry, more sufficient into the second half, DDR4?
I think DDR4 still the major, major volume, okay, compared to DDR3, okay? So with the inventory level at the supplier side is very low, okay, and also the customer side, inventory level is relatively healthy, I don't see the market will be making the reverse trend very quickly, okay?
Okay. And for DDR3, how do we think about -- yes, I mean any indicator, right, meaning inventory at customers or [ sort of ] the order lead times. Do you have any kind of the trend of the DDR3 demand in terms of the orderly time or inventory at customers?
DDR3, the outlook for Q3 are good, okay? And Q4 is still not negotiated, but from a current outlook, from a customer response, DDR3 Q4 is remaining healthy.
Okay. Okay. And lastly, I'm not sure if I heard you wrong. Regarding your 12-inch fab, right, did you say part of the CapEx is for the EUV facility or you mean by the overall industry, not your 12-inch fab, the EUV facility?
Including. Including.
Oh, including?
Yes.
Okay. Well, so -- yes, I think can we have some more details on that? For example, how many layers you would require? Is that 1A or 1...
No, it's not going to be IA. It's not going to be IB. It's not going to be first 2 generation, okay? We may do some development work on the earlier generation, but our plan is to follow up generation beyond first 2, okay? So it's still yet to give you details yet.
Okay. But have you placed an order -- yes, because...
Not yet.
Okay. Okay. Understood. And on this front, can you -- yes, can you please update when your 1B DRAM will start the mass production or [indiscernible] to the customers?
Our first generation is currently on piloting, as I reported. And second generation is on track. We are also targeted from -- next year for sampling.
Next one to ask questions, Simon Woo from Bank of America.
Just one simple question. Because I'm feeling that the second quarter, sorry asking this again, the pricing momentum is very good. But my question is the sustainability maybe for the midterm given the fact 2 gigabit -- the price, according to the Street data point, in the 2-gigabit DDR3, $3 range. And then DDR3 4 gigabit was low $3. The inventory -- I mean the 2 gigabit price, 4 gigabit price under the DDR3 [indiscernible] are getting similar. Then I think that maybe your customers may shift more into the 4 gigabit at $3. In that case, premium very, very expensive. When 2 gigabit price premium may decline sharply, then you will receive that your blended ASP trend as well. Maybe how about this way, sir. Why are your customers still using the 2 gigabit rather than 4 gigabit, the price level quite similar to the 4 gigabit -- the price level. And then the rich applications are really, really need for the 2 gigabit [indiscernible] 4 gigabit still consumer electronics and auto industrial areas, and then these customers, if they suddenly shift to 4 gigabit area, it may hurt your blended ASP or price premium there.
Simon, the -- first of all, the 2-gigabit and 4-gigabit DDR3 is not the same price, okay? There's still some gap in between these 2. So what you just described is not happen.
Okay. Then where to use the [indiscernible]. Why not your customers use very commoditized, the 8 gigabit, which is quite cheap [indiscernible] profit base there?
Yes. The customer -- of course, as I described to you, 4 gigabit, unit-wise, still higher than 2 gigabit. Of course, 8 gigabit, unit-wise, still higher than 4 gigabit. So this is from a customer point of view that overall costs still lower in lower density, okay? Also, this has to do with their overall design, okay? Do they need 8 gigabit or 2 gigabit is sufficient and how they manage the data, okay? So in general speaking, still -- low density still from the overall -- on cost point of view is still lower.
Yes. Okay. That's a fair point. On unit basis, 8 gigabit, yes, is still more expensive than 1 unit price of the 8 gigabit, but I'm feeling that the price difference these days is very, very...
It's not double, but it still has some gap.
Ladies and gentlemen, we thank you for your questions. And now we are going to proceed with the webcast Q&A session. Dr. Lee, please begin.
Okay. We're seeing 2 questions online. Question one from [ Cathay Life, Ken Wang ]. Provide guidance about Nanya's following R&D and SG&A expense plan. Our R&D expense will be slightly higher than before, okay, and will be similar to this quarter or slightly higher. We try to improve our R&D delivery, so we will spend more on R&D. SG&A expense is -- mostly will be very similar with the major changes that is -- exchange rate, if it's favorable, unfavorable, will make some difference. And plus, if we're making a little bit more money, we will reserve a little bit more employee bonus, things like that, okay? But in general speaking, SG&A will have less variation, which R&D may slightly increase over the quarter. The second question is Stanley Wang from SinoPac. We know that you are under migration to 1A and 1B in this year and next year, so give us some color about bit growth in the next year. I don't know what color I can give you. Lower than industry average, high teens. We may be still lower than industry average, but we will try to deliver some growth according to what I just say. We are very limited in -- for space now, and we will rely on our bit growth on the technology conversion. So likely next year, the bit growth will be very limited, some but not a lot. And hopefully, the year after that, 2022, had a little more. And then beyond that, our new fab come up 2024, we have more. Okay?
Yes. Thank you, Dr. Lee. That concludes our conference call today. Please be advised that the replay of the conference will be accessible within 3 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. We thank you for your participation, and have a wonderful day. You may disconnect now. Thank you, and goodbye.