Expect Soaring NAND Prices Amid Unprecedented Demand, According to Phison Report

The NAND industry is currently witnessing an extraordinary surge in demand, reminiscent of the recent trends in the DRAM market. Phison, a prominent player in the sector, has characterized the current market dynamics as “shocking, ”hinting at the rapid evolution taking place.

Rising Prices: The Effect of AI on Consumer SSDs and NAND Chips

Artificial intelligence (AI) has transformed various market segments and is now making significant inroads into the memory sector, specifically affecting the supply chains of DRAM and NAND memory. According to insights from Phison’s Q3 earnings call, CEO Khein-Seng Pua highlighted a memory cycle that’s unprecedented in nature. He noted that the average selling prices (ASPs) of NAND TLC memory have surged dramatically—by as much as 50% to 75% within just a few months. This trend indicates a significant increase in costs for consumer solid-state drives (SSDs) and associated NAND products.

The massive demand for NAND can be attributed to its critical role in AI-driven applications, particularly in inference tasks. In data center settings, NAND-based storage solutions are essential for preloading large language models (LLMs) into local SSDs, enabling quick and efficient access. When updates occur, they are seamlessly incorporated into the SSDs, ensuring models remain current. Phison reports a “tight market”for supplies, suggesting that the climb in NAND TLC prices is poised to continue.

A close-up of a Phison PS5025-E25-53 solid-state drive against a blurred, colorful background.

The NAND industry had previously faced a prolonged period of reduced demand—a “demand drought”—but the emergence of AI inference has ignited a massive need for storage solutions within AI contexts. Phison’s CEO indicates that production facilities have been underutilized recently, leading suppliers to proceed with caution regarding capacity expansion. Nonetheless, due to the unprecedented demand fueled by AI, expectations for supply increases over time are optimistic.

We believe NAND companies aren’t willing to expand the fabrication facilities until now because, in the last five years from COVID until now, total profit in the NAND sector has been flat. They haven’t seen significant profits, but moving forward they are starting to see positive returns.– Phison CEO

Similar to the early rises in DRAM prices, consumers can expect a substantial increase in SSD prices, particularly for higher-capacity models. As a result, the upcoming ‘deals season’ could represent an opportune time for consumers to enhance their computer storage capabilities before potential price hikes set in.

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