J.P. Morgan raises Winbond target price to NT$255, betting on a longer memory upcycle

Overview

This report is a company research and outlook update by J.P. Morgan on Winbond (2344.TW). The analysts maintain a positive view on the company, believing that a higher and longer DRAM/NAND upcycle will materially benefit Winbond, especially its traditional DRAM, SLC NAND, and NOR flash businesses. The report raises the Dec-26 target price to NT$255 and maintains the Overweight rating.

Core views

The core views include: first, the widening global DRAM supply-demand gap, with major memory makers continuing to reduce DDR4 supply, benefiting niche and traditional DRAM makers such as Winbond; second, Winbond is reducing cyclicality and improving visibility through capacity upgrades, expansion plans, server-related demand, long-term agreements, and customized DRAM; third, improving supply dynamics in SLC NAND and NOR flash should allow Winbond to improve profitability through capacity expansion, market share gains, and price increases; fourth, the market may be underestimating the company's EPS potential for 2026-2027.

Analysis framework

The report uses upward revisions to company earnings forecasts, industry supply-demand analysis, segment revenue and gross profit structure forecasts, market share analysis, and a relative valuation framework. For valuation, the target price is based on 3.0x 2027E P/B, cross-referenced with its implied 5.9x 2027E P/E.

Methodology notes

• Valuation methodsP/B valuation method

  The target price is derived by multiplying 2027E book value per share by the target P/B multiple.

  J.P. Morgan sets Winbond's Dec-26 target price at NT$255, based on 3.0x 2027E P/B, corresponding to 5.9x 2027E P/E.

• Industry Supply and DemandDRAM supply-demand gap analysis

  Price and capacity utilization trends are assessed by forecasting the industry's undersupply rate.

  The report cites forecasts from the global memory team that DRAM undersupply rates will be 6%/11%/13% in 2026/2027/2028, supporting improved fundamentals for traditional DRAM makers.

• Earnings ForecastEPS upward revision and consensus comparison

  Differences between analyst forecasts and market consensus are compared to identify market expectation gaps.

  The report raises 2026E/2027E EPS by 16%/55% to NT$25.4/NT$43.2, respectively, 38%/45% above Bloomberg consensus.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Winbond (2344.TW)

  Core covered name

  Strengths

  Benefits from the traditional DRAM upcycle, LTA lock-ins, server demand, capacity upgrades, global leadership in NOR flash, and SLC NAND expansion.

  Weaknesses

  The business remains exposed to memory cycle volatility, and some growth depends on ramp-up of new capacity, new products, and the CUBE business.

  Comparison

  The report believes its 2026E/2027E EPS is 38%/45% above Bloomberg consensus, indicating the market may be underestimating its earnings power.

  Risks

  Traditional consumer DRAM prices and demand may fall short of expectations; SLC NAND and NOR flash prices or demand may weaken; the CUBE business may ramp more slowly than expected.

• DRAM

  Main growth driver

  Strengths

  Widening undersupply, shrinking DDR4 supply, and strong demand from servers and long-lifecycle applications.

  Weaknesses

  Still cyclical, and profitability would be affected if prices and demand come in below expectations.

  Comparison

  The report forecasts Winbond DRAM revenue at NT$156bn in 2026 and NT$239bn in 2027, contributing 60% of revenue and 66% of gross profit in 2027.

  Risks

  Traditional consumer DRAM contract prices and demand in 4Q25-2Q26 may be weaker than expected.

• SLC NAND and NOR flash

  Source of market share gains and profitability improvement

  Strengths

  No.1 globally in NOR flash, with potential share gains in SLC NAND; prices supported by supply exits, AI servers, automotive, and server demand.

  Weaknesses

  Capacity expansion and market share gains require successful execution.

  Comparison

  The report expects 2025-2027 flash revenue CAGR of 99%, with SLC NAND gross margin of 70-80% and NOR flash gross margin of 55-60% in 2026-2027.

  Risks

  SLC NAND and NOR flash price and demand trends may be weaker than expected.

Key data

• Current share priceNT$172.00Price date is June 12, 2026.
• Target priceNT$255.00Dec-26 target price; previous target price was Jun-26 NT$173.00.
• RatingOverweightJ.P. Morgan maintains an Overweight rating.
• Global DRAM undersupply rate forecast6%/11%/13% in 2026/2027/2028From forecasts by J.P. Morgan's global memory research team.
• Winbond DRAM revenue forecastNT$156bn in 2026, NT$239bn in 2027The report expects DRAM bit shipments and bit ASP to roughly double and triple, respectively, in 2026, with a further 20-30% increase in 2027.
• DRAM revenue/gross profit contribution60%/66% in 2027DRAM is expected to become the company's main source of revenue and gross profit.
• 2026E/2027E EPSNT$25.4/NT$43.2Raised 16%/55% versus prior forecasts and 38%/45% above Bloomberg consensus.
• NOR flash market share23% in 2025The report states that Winbond is No.1 globally in NOR flash.
• SLC NAND market share15% in 2025The report states that Winbond is No.3 globally and aims to become No.1.
• flash revenue CAGR99% in 2025-2027Flash is expected to account for about 30% of revenue in both 2026 and 2027.

Impact & implications

If the report's view plays out, Winbond's investment thesis would shift from a simple cyclical rebound to higher-visibility earnings expansion: DRAM would benefit from DDR4 supply contraction, server demand, and LTA protection, while the flash business would benefit from leadership in NOR, rising SLC NAND share, and supply exits. The target price increase reflects that the market may not yet fully price in EPS upside for 2026-2027.

Risks

• Traditional consumer DRAM contract price and demand trends in 4Q25-2Q26 are weaker than expected.
• SLC NAND and NOR flash price and demand trends are weaker than expected.
• CUBE business ramp-up progress is slower than expected.
• If execution of new capacity, new products, and LTAs falls short of expectations, revenue and profit expansion may weaken.

What to watch

• Shipment mix and customer demand after DDR4 8Gb volume ramps from 3Q26.
• Whether the DRAM industry supply-demand gap widens as expected in 2026-2028.
• Order sustainability from CSP customers for DRAM, NOR flash, and SLC NAND.
• Progress in capacity expansion, market share gains, and gross margin delivery for SLC NAND and NOR flash.
• Revenue contribution from CUBE edge AI 3D DRAM after 2027.