MAX 10 in place of Cyclone IV

The code you have be interpreted as memory or not. This depends on many factors like the usage of that memory and its size. Small size memory may not utilize memory but will utilize logic (this is common).

INTEGERs are just bits. Every data type in VHDL will be synthesized to bits (except things like REAL). Integers commonly will occupy 32 bits. The tool may be smart enough to detect that your integers are small, like the value 127 which you use. You can explicitly tell the compiler about the integer value range to ease the optimization.

You may write

type MATRIX is array (0 to 7, 0 to 15) of INTEGER range 0 to 127;