Phison CEO: NAND Prices Jump 50% Overnight Amid Severe AI-Driven Shortage
Key Facts
- What: Phison Electronics CEO Khein-seng Pua reported some NAND flash manufacturers raised prices by as much as 50% overnight due to extreme supply shortages.
- Cause: Surging demand from AI infrastructure build-out by cloud service providers and hyperscalers.
- Phison Response: Company now delivers enterprise SSDs directly to CSPs and AI customers, accounting for 30% of revenue; securing long-term agreements (LTAs) with six NAND and two DRAM suppliers.
- Financial Strain: Inventory value rose from NT$35.6 billion (~US$1.12 billion) to NT$50 billion (~US$1.57 billion), yet CEO warns “our current concern is that both money and inventory are insufficient.”
- Mitigation: Demanding shorter payment terms or upfront payments from customers; negotiating prepaid NAND; board approved $400–500 million in borrowing; developing PCIe 6.0 (samples by August 2026) and PCIe 7.0.
Lead
Phison Electronics CEO Khein-seng Pua revealed that NAND flash prices have spiked by up to 50% overnight, underscoring a severe industry-wide shortage fueled by explosive AI data center demand. The Taiwanese controller and storage solution provider has shifted focus to high-margin enterprise SSDs for cloud hyperscalers, which now represent 30% of its revenue, while implementing stricter payment terms and long-term supply contracts to secure scarce memory chips. Despite rapidly growing inventory and new financing, Pua stated the company’s primary concern remains that “both money and inventory are insufficient,” highlighting the intense pressure across the memory supply chain.
Body
The announcement, reported by Tom’s Hardware and Digitimes, paints a stark picture of the memory market in 2026. According to Pua, several NAND manufacturers informed Phison that their entire 2026 production capacity is already sold out. This extreme tightness has prompted sudden and dramatic price hikes, with some suppliers increasing quotations by around 50% in a single night.
Phison, best known for its SSD controller chips, has responded by pivoting aggressively toward the enterprise and AI segment. The company now ships products directly to major cloud service providers and AI hyperscalers rather than relying solely on traditional channels. This strategic shift has paid off quickly: enterprise SSD solutions now contribute approximately 30% of Phison’s total revenue, according to the CEO’s comments.
To cope with its own suppliers demanding faster payments, Phison has begun requiring shorter payment windows from customers, with some clients asked to pay upfront. This mirrors the pressure propagating through the entire supply chain as manufacturers seek to manage cash flow amid skyrocketing component costs.
Supply Security Measures
In an effort to stabilize its position, Phison has signed long-term agreements with six NAND flash manufacturers and two DRAM suppliers worldwide. Pua emphasized that the primary goal of these LTAs is securing sufficient supply volume rather than locking in favorable pricing. The company is also negotiating prepaid arrangements for NAND chips to guarantee priority access during the ongoing shortage.
Despite these measures, inventory challenges persist. Phison’s inventory value increased significantly from NT$35.6 billion (approximately US$1.12 billion) to NT$50 billion (about US$1.57 billion) in just a few months. Yet Pua candidly admitted the company still faces severe constraints, stating “our current concern is that both money and inventory are insufficient.”
The CEO noted that while lower-cost older inventory provides some margin relief, Phison is not relying on it as a primary profit driver. Demand from cloud and enterprise customers continues to outstrip supply, driving higher revenues even at elevated prices. Pua described the situation as one where both Phison and its customers have become “memory beggars,” with fulfillment rates for some orders falling below 30%.
Broader Market Impact and Extreme Examples
The shortage has produced extreme price distortions across memory segments. In a related earlier statement covered by Tom’s Hardware, Pua highlighted that 8GB eMMC modules — used extensively in consumer electronics and automotive applications — rose from $1.50 to $20 over the past year, representing a roughly 13x increase. Even at these inflated prices, securing supply remains extremely difficult.
The pressure is expected to intensify as AI workloads shift from training large models to inference, which requires sustained, high-volume deployment of storage and memory across data centers. Industry observers note that manufacturers are reallocating production capacity toward high-bandwidth memory (HBM) and enterprise-grade NAND, further constraining supply for consumer and mainstream segments.
Financial and Technology Roadmap
To fund operations and continued R&D during this period of constrained supply and rising costs, Phison’s board has approved a plan to borrow between $400 million and $500 million. This capital will support both working capital needs and the development of next-generation storage technologies.
On the product front, the company continues pushing forward with advanced interfaces. Phison plans to deliver PCIe 6.0 controller samples by August 2026 and is actively working on PCIe 7.0 support. These next-generation controllers will be critical for future high-performance enterprise SSDs demanded by AI infrastructure operators.
Impact
For AI hyperscalers and large cloud providers, the NAND shortage means higher costs and continued procurement challenges. Companies with deep pockets are willing to pay premiums and accept upfront payment terms to ensure their data center build-outs stay on schedule. Smaller players and consumer electronics manufacturers face greater risk, with some industry voices warning that entire companies could face shutdowns in 2026 if memory supply does not improve.
The situation also accelerates the trend of vertical integration and direct relationships between storage solution providers like Phison and end customers. Traditional distribution channels are being bypassed as hyperscalers seek guaranteed supply.
For the broader semiconductor industry, the memory crunch highlights the dramatic reallocation of manufacturing capacity toward AI-related technologies. Foundries and memory producers are prioritizing high-margin AI products, leaving mainstream consumer, automotive, and PC segments struggling with both availability and pricing.
What’s Next
Pua indicated that 2026 capacity is already fully committed across major NAND suppliers, suggesting limited near-term relief. The transition of AI workloads toward inference is expected to sustain or even increase pressure on NAND and DRAM supply throughout the year and into 2027.
Phison’s long-term agreements and prepaid negotiations may provide the company with better positioning than smaller competitors, but the CEO’s repeated warnings about insufficient money and inventory suggest the memory market will remain challenging for the foreseeable future. The company’s planned PCIe 6.0 and PCIe 7.0 developments will be essential for maintaining its competitive edge once supply eventually stabilizes.
Industry analysts will be closely watching whether memory manufacturers can bring new fabrication capacity online quickly enough to ease the shortage, or whether AI demand will continue to outpace supply growth well into the latter half of the decade.
Sources
- Tom’s Hardware - Phison CEO says that NAND prices hiked by around 50% overnight
- Digitimes - Phison says NAND prices jumped 50% overnight as supply crunch continues
- PC Gamer - Phison CEO says 'both money and inventory are insufficient' as NAND prices continue to climb
- Tom’s Hardware - Phison CEO thinks NAND shortages could shut down entire consumer electronics companies in 2026