Despite record inventories, Phison Electronics warns that NAND supply remains tight due to growing AI-driven storage needs and slow capacity expansion, projecting shortages lasting several years.
Phison Electronics is sitting on a record inventory pile, but chief executive Pan Chien-cheng says the company is still not holding enough NAND flash to meet future deliveries as artificial intelligence demand reshapes the storage market. At the end of the second quarter, Phison’s net inventory stood at NT$91.792 billion, with average stock days of 297, yet Pan said the tighter issue is supply, not price, because cash in hand does not always guarantee access to chips.
Pan said the company is still able to secure NAND, but not in the volumes needed to match demand from cloud service providers, original equipment makers and AI-related customers. Much of Phison’s storage has already been designed into customer products, especially enterprise and hyperscale projects whose delivery cycles can stretch from 12 to 24 months, so selling inventory aggressively now could leave the company short when orders come due later.
The backdrop is a market that has moved away from the weak pricing environment seen in late 2024 and early 2025. TrendForce reported that NAND contract prices fell in the second half of 2024 as consumer demand softened and buyers cut inventories, with enterprise SSDs the only segment showing some resilience. More recently, Counterpoint Research said enterprise SSDs accounted for 48% of all NAND bits shipped in the second quarter of 2026, up sharply from 26% a year earlier, as AI servers absorbed more storage. The same report said Yangtze Memory Technologies Co. entered the global top three NAND suppliers by shipment volume, underscoring how the market is being pulled towards enterprise demand.
Pan said some of the apparent softness in spot prices does not reflect a true easing of the shortage. He pointed to Chinese module makers selling down inventory to raise cash, while Phison moved to buy NAND wafers from Shenzhen suppliers in June and July at prices below original contract levels. In his view, that created an opportunity to add stock for long-cycle enterprise and AI projects rather than a sign that the market had turned.
He argued that supply growth will remain slow because NAND capacity takes years to bring on stream. Even if producers invest now, it can still take about 4 years from investment to meaningful output, leaving little room for a quick fix. Pan said shortages are likely to last for “many years” and warned that next year could be even tighter than this one. He added that while NAND prices are still likely to rise, the increases should gradually flatten as the base moves higher. At the same time, he said excessively high margins at memory makers would not be healthy for the wider industry, especially in price-sensitive segments such as consumer electronics and IoT.
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