Macronix Gross Margin Climbs to 64% as Memory Chip Shortage Drives Price Gains

Supply Constraints Push Profitability Higher

Macronix International, a major Taiwanese supplier of NOR and NAND flash memory chips, reported a gross margin of 64.4 percent in the second quarter, up sharply from 40.8 percent in the first quarter and 15.6 percent a year earlier. The company attributed the improvement to price increases driven by structural supply shortages across both NAND and NOR flash markets.

President C.Y. Lu told investors that demand is significantly exceeding supply across the company's product lines. The shortage has been particularly acute in NAND flash used in embedded multimedia cards (eMMC), where Macronix holds a dominant position in the low-density multi-level-cell segment. Lu said the company expects price increases in this category to continue through the current quarter.

Macronix is targeting a gross margin of 80 percent in the foreseeable future, bringing its profitability in line with DRAM chipmakers. The projection reflects the company's confidence that tight supply conditions will persist even as it expands production capacity.

Record Revenue Driven by NAND Surge

Revenue reached NT$19.13 billion (US$590.7 million) in the second quarter, an 83 percent sequential increase and 181 percent jump from the prior year. The company said this marked an all-time quarterly high.

NAND products drove the strongest growth, with revenue climbing 163 percent quarter-on-quarter and 798 percent year-on-year. NAND accounted for 43 percent of total revenue in the quarter, a significant expansion from its typical 13 percent share. The shift reflects both volume growth and the sharp price increases Lu referenced.

NOR flash, traditionally the company's core business, contributed 48 percent of revenue, down from its usual 60 percent share but still posting solid gains of 48 percent sequentially and 101 percent annually. The relative decline in NOR's revenue contribution reflects NAND's outsize growth rather than weakness in the NOR business.

Aggressive Capacity Expansion Plans

Macronix announced plans to invest an additional NT$12.8 billion (US$395.5 million) to expand production capacity for NOR, NAND and eMMC products. The company is raising total capital expenditure for the year to NT$34.8 billion and expects to add 4,000 to 5,000 twelve-inch wafer equivalents per month to its current capacity of 25,000 wafers.

Lu said the company expects to recover these investments within two years, citing what the company views as a super cycle in the memory industry fueled by artificial intelligence applications. High-density memory chips used in AI systems have become a key growth driver for Macronix and other specialty memory suppliers.

The company dismissed concerns about potential NAND oversupply in the second half of next year, with Lu stating that Macronix sees no signs of overcapacity emerging in the near term.

Profitability Swings from Loss to Record Profit

Net profit reached NT$7.73 billion in the second quarter, a 334 percent increase from NT$1.78 billion in the first quarter. The result reversed a net loss of NT$1.28 billion in the same quarter last year. Cumulative net profit for the first half of 2026 totaled NT$9.52 billion, compared with a loss of NT$2.15 billion in the first half of 2025.

The turnaround reflects the memory industry's cyclical nature and Macronix's positioning in segments where supply has tightened faster than in commodity DRAM or high-capacity NAND markets. The company's focus on specialty applications, including automotive, industrial and now AI-related uses, has allowed it to capture pricing power as customers scramble to secure supply.

Asia's Memory Supply Chain Under Pressure

Macronix's results highlight the uneven recovery across Asia's memory chip sector. While commodity DRAM and high-capacity NAND markets have seen capacity additions from major Korean and Chinese producers, specialty memory segments remain constrained. Taiwanese suppliers like Macronix have benefited from this divergence, capturing premium pricing in applications where switching costs are high and qualification cycles are long.

The company's aggressive capacity expansion comes as memory chipmakers across the region reassess investment plans amid uncertain macroeconomic conditions. Macronix's confidence in a sustained upcycle contrasts with more cautious outlooks from some competitors, suggesting the specialty memory segment may follow a different trajectory than mainstream memory markets.

The NT$34.8 billion capital expenditure plan represents a significant commitment for a company of Macronix's size, underscoring management's conviction that AI-driven demand and structural shortages will support elevated pricing and margins well into next year. Whether that bet pays off will depend on how quickly new capacity comes online across the industry and whether end-market demand for AI systems continues at its current pace.