Reason for rising SSD prices: Phison now requires prepayment for controllers

Memory crisis amid AI booms

Artificial intelligence is accelerating demand for solid-state memory, creating a shortage of NAND chips. In response, SSD controller and module manufacturers are revising supply terms: prepayment requirements and accelerated payments are rising.

Phison – SSD controllers
- Business model

Phison sells partners “semi-finished products” (controller + flash memory) that customers use when assembling SSDs.

- New terms

Amid the chip shortage, the company announced it now requires either full prepayment or accelerated payment for deliveries. This will allow better material procurement planning and increase operational flexibility.

- Financial result

Thanks to growing demand for AI equipment, Phison increased revenue in January almost threefold compared with last year, reaching a record $331 million (a 20 % rise from the previous quarter).

Situation at NAND manufacturers
- New practices

Most companies producing NAND chips now require prepayment. For example, SanDisk offers customers full prepayment for one or three years.

- Long‑term contracts

SanDisk leadership announced a shift to multi‑year agreements (up to five years), as clients are already placing orders through 2028. It is expected that this year the main NAND market will be the server segment with growth from 25 % to 60 %.

- Kioxia

Kioxia’s profit in Q1 is projected to increase almost 26‑fold to $2.2 million. NAND orders for servers cover the entire next year and even into 2028. The company plans to raise capital expenditures by 24 % due to expanding production of memory demanded by AI. However, rising DRAM prices are forcing Kioxia to seek new suppliers and shift some costs onto customers.

Conclusion:

The NAND chip shortage forces manufacturers to change payment policies—from prepayment to accelerated payments—and to move toward longer contracts. This increases financial pressure on both suppliers and their clients but also opens opportunities for supply‑chain optimization amid the rapid growth of the AI market.