Barely two weeks have gone by Since Phison's CEO remarked that at least one NAND foundry was seeking immediate cash payments from its buyers. Now the strain on NAND manufacturers has impacted Phison directly.
- AI data centers are consuming the global inventory of memory and storage.
- Semiconductor shortages impact the automotive sector during the intensifying Nexperia and DRAM crisis.
- Samsung and SK hynix decrease the duration of memory agreements as control over pricing reverts to the manufacturers.
- Memory producers are projected to generate $551 billion through the AI surge.
In a letter sent to its customers, Phison states that "[its] key suppliers have recently adjusted their payment requirements as advance payment or shorten payment" (sic), and that the firm has been "extending financial support for [customers'] orders over the past period".
This seemingly translates to Phison having already paid some of its NAND suppliers upfront, and is now in the unenviable position of passing the pain to its clients.
Phison is widely identified as an SSD controller producer, yet a fundamental element of its enterprise is manufacturing physical drives for enterprise and automotive buyers, among various others.
This move is harsh but not unexpected, given various reports illustrating the meteoric rise of NAND flash pricing over the last few months. Current pricing can be roughly estimated as somewhere between 3x and 4x what the chips were going for in Q2 2025, and there's no word on any near- or even mid-term stabilization.
The shortage has reportedly led SanDisk and Kioxia to start demanding pre-payment for long-term NAND contracts, in a similar move to DRAM makers. Samsung, the premier entity in the flash industry, has seemingly transitioned to quarterly NAND cost discussions, and it would not be particularly shocking if the South Korean giant aligned with its peers in the shift toward requesting pre-payment.
The phrasing in Phison's correspondence isn't explicit regarding which categories of customers will be requested to provide advance payments and which will encounter tighter payment schedules, indicating Phison plans to determine conditions on an individual basis. It's not hard to imagine that the company will prioritize allocations and perhaps extend more generous terms to larger customers, seeing as the letter mentions the usual "rapid changes from AI infrastructure".
