Powerchip 2Q26 Gross Margin Rises to 28%; DRAM Shortage to Extend Through 2027
0xBroomberg
Powerchip posted NT$17.29 billion in Q2 revenue, up 27% sequentially and 53% year-on-year, with gross margin surging to 28% — driven almost entirely by DRAM price hikes the company expects to persist through 2027.
What do the headline numbers show?
Q2 revenue hit NT$17.29 billion (~US$538 million), up 27% quarter-on-quarter and 53% year-on-year. Gross margin reached 28%, an 18-point jump from Q1.
Operating margin flipped to 21%, versus a loss in the year-ago quarter. This means → Powerchip went from red to a 20%-plus margin in twelve months.
First-half net income totalled NT$17.52 billion, though that includes a one-off gain from selling the Tongluo fab to Micron in Q1. Strip that out and recurring profit still improved markedly.
Why did gross margin leap so far in one quarter?
The main driver: DRAM average selling prices rose sharply. Shipment volume also grew, while utilisation held at 87%–88%, keeping the cost base roughly flat.
In plain terms = sell about the same volume, charge a lot more per wafer, and costs barely move — margin expands almost mechanically.
DRAM now accounts for 46% of Q2 revenue; add flash at ~6% and memory totals 52%, overtaking logic foundry as the largest revenue source.
How are the non-DRAM business lines doing?
Logic foundry did not shrink — both shipments and ASP grew. DRAM simply rose faster, compressing logic's share.
3D AI foundry revenue share climbed from 3.2% in Q1 to 5.4%, expanding in absolute terms.
Power-management ICs (PMIC) contributed 15%, discretes 12%, image sensors 4%, and high-voltage processes roughly 7% — a reasonably diversified product mix.
The July price hike was 45% — when will it show up?
Powerchip completed a first round of structural DRAM repricing in February; the effect began flowing through from June. In July it raised wafer-start prices by another ~45%.
Production-cycle lag means the new pricing won't hit reported revenue until November. This means → November and December should show a step-function rise in both revenue and margin.
July itself may see a brief slowdown as the company relocates Tongluo equipment back to Hsinchu and adjusts annual taxes. August onward, management expects momentum to re-accelerate.
Can the DRAM shortage really last until 2027?
Management's call: the global DRAM supply-demand gap will persist through 2027, with memory's revenue share still rising.
Utilisation already sits at 87%–88% and is expected to approach full capacity in Q3–Q4. In plain terms = the fabs are nearly maxed out, leaving little room for a quick supply response — the tight-supply picture is hard to break in the near term.
The key test: whether the 45% July wafer-start hike converts into a visible revenue step in November. If it does, the shortage thesis holds; if the uplift disappoints, markets will reassess the whole narrative.
Content is for reference only, not financial advice.