Phison Implements ‘Prepayment’ Model for NAND Supply to Ensure Cash Security Before Customer Allocation

Phison Technology is encountering a transformative shift in its business strategy amid a challenging NAND market. To adapt to the prevailing seller’s market, the company is now emphasizing upfront capital from its customers, a significant departure from traditional models.

NAND Prices Surge by Over 500% in Just One Year, Fueled by AI Demand

The NAND memory sector is grappling with a pronounced supply chain imbalance, driven largely by the burgeoning demand for storage solutions in artificial intelligence (AI) applications. Recent months have witnessed a steep increase in NAND spot prices, critically impacting profit margins for suppliers such as Phison. As highlighted in a DigiTimes report, Phison is transitioning to a ‘prepayment’ model, which requires customers to secure supply by delivering advance capital.

The company said rising NAND prices have sharply increased its funding requirements. To secure a more stable supply, it will discuss prepayment arrangements with customers on a case-by-case basis.

– DigiTimes

According to industry analysts, NAND prices have skyrocketed by more than 500% in the past year, with projections indicating that this upward trend is likely to continue. A key rationale behind Phison’s decision to implement a ‘prepayment’ model lies in the anticipated expanded role of NAND chips in AI technologies. This expectation aligns with NVIDIA’s recent initiatives, particularly their Vera Rubin platform, which aims to tackle storage challenges in AI inference. At the CES 2026 event, NVIDIA showcased its Inference Memory Context Storage (ICMS) platform, specifically designed for KV Cache offloading and optimized for NAND storage solutions.

Samsung QLC V-NAND — Image Credit: Samsung

The projected shipping figures for Vera Rubin alone could account for over 10% of the total NAND supply, indicating that suppliers like Phison are positioning themselves strategically to meet this surging demand. As the influence of AI applications on NAND supply continues to grow, there is a looming concern for the consumer sector reminiscent of past challenges faced in the DRAM market. Current trends indicate that solid-state drive (SSD) prices are still on the rise, suggesting that significant NAND shortages are far from resolved.

Source & Images