Phison is making a major change to how it sells NAND flash as the memory market swings deeper into a seller’s market. With NAND supply tightening and prices soaring, the company is moving toward a prepayment model, asking customers to put capital down upfront to lock in supply.
The shift comes as NAND prices have reportedly jumped by more than 500% over the past year, creating serious pressure across the storage supply chain. For a supplier like Phison, rapidly rising NAND costs don’t just raise the price of components—they also dramatically increase the amount of funding needed to secure inventory. Phison says it plans to work out prepayment arrangements with customers on a case-by-case basis, aiming to stabilize access to NAND amid ongoing volatility.
A big driver behind the imbalance is AI. Storage has become far more critical for AI inference than it was even a year ago, and that is accelerating demand for NAND-based solutions. As AI systems scale, they generate massive volumes of data and require fast, efficient ways to store and retrieve information during inference. That has pushed NAND spot prices higher quarter after quarter—and the broader market expectation is that demand will keep climbing.
Industry attention is also focused on how next-generation AI platforms are treating storage as a core bottleneck. New approaches are emerging to reduce pressure on expensive high-bandwidth memory by offloading certain workloads to storage, including NAND-based devices. One highlighted area is key-value (KV) cache offloading, which is designed to help AI systems handle larger context windows and inference workloads more efficiently. As these designs become more common, NAND’s role in AI infrastructure is expected to expand sharply.
Forecasts for upcoming AI hardware deployments suggest that demand could become so large it meaningfully moves the entire NAND market. In fact, projected rack shipment volumes for next-generation AI platforms could consume more than 10% of total NAND supply on their own. That’s a huge figure in a market where supply is already constrained—and it helps explain why suppliers are tightening terms and looking for upfront commitments.
For everyday buyers, the implications are familiar. When enterprise and AI customers gain more influence over memory supply, consumer availability and pricing often worsen. SSD prices are already climbing aggressively, and if NAND shortages persist, the consumer storage market could face additional price hikes and limited availability for months to come.
In short, Phison’s move to prepayment reflects a NAND market being reshaped by AI demand, tighter supply conditions, and rapidly rising prices. If the current trajectory continues, both enterprise buyers and consumers may need to brace for further increases—especially as AI infrastructure builds accelerate and storage becomes an even bigger part of the compute equation.
