Phison CEO Pua Khein-Seng warns that NAND supply will not meet demand for approximately four years, indicating that SSD prices will likely remain elevated through 2030.
Memory and storage are critical components for AI data centers. As the demand for memory increases, so does the need for storage. Major NAND producers are now informing the market that it will take years for supply to catch up with demand.
According to Phison's CEO, the current NAND production capacity cannot meet short-term demand. The company is building a "strategic" inventory to ensure a stable supply of Enterprise SSDs for CSPs and AI firms for the next two years. However, demand is so high that it will take years for production to catch up.
Phison's CEO explained that while the market perceives that manufacturers can easily build and expand new production capacity, the reality is that the time required to set up new production is significantly longer. NAND manufacturers informed him that even a two-year timeline for new capacity is ambitious, and it would actually take around four years to establish new production facilities.
Pua Khein-Seng stated that the market often believes that after memory prices rise, manufacturers can quickly increase capital expenditures and expand production capacity, but in reality, the time required to add new NAND production capacity is much longer than the market imagines.
He revealed that during a recent exchange with senior executives of a NAND manufacturer, he inquired about the timeframe from investment to actual mass production. He initially estimated it would take about two years, but the response he received was "four years".
Consequently, the current estimation is that NAND shortages will persist for at least four years from now. During this period, NAND prices are expected to increase substantially as demand continues to grow. Phison will withhold a significant portion of its inventory as part of its "strategic" reserve, as it will be unable to secure sufficient supply in the future, impacting its "long-term" partnerships.
To exacerbate the situation, while AI firms and cloud providers are adjusting their DRAM specifications, NAND capacity has not decreased significantly, highlighting the importance of storage in the AI era. The rise of Agentic AI and GenAI use cases necessitates the storage of large amounts of data in the cloud, which in turn requires more storage capacity.
Phison is working to accelerate its NAND product roadmap in the Enterprise SSD and AI-SSD segments. However, despite rising costs, its gross margins are not expected to increase significantly due to the escalating NAND procurement costs. Phison did achieve a record-high gross margin of 65.3% during Q2 2026.
Looking ahead, Phison is shifting its strategy as part of its "Phison 3.0" initiative, which will involve a greater focus on AI Storage, Edge AI, and AI platforms, rather than solely relying on NAND controllers and storage modules.
