AI Boom Drives Looming Decade-Long NAND Flash Shortage
The rapid expansion of artificial intelligence infrastructure is putting unprecedented pressure on the global semiconductor supply chain. While much attention has focused on GPUs and high-bandwidth memory, NAND-based storage is emerging as a critical bottleneck. According to Phison Electronics CEO Pua Khein-Seng, the industry could face a severe NAND flash shortage starting in 2026, potentially lasting up to a decade—far longer than previous shortages, which typically resolved within a year or two.
Why NAND Flash Supply Is Under Threat
In a recent interview, Pua Khein-Seng highlighted several factors contributing to the looming NAND flash shortage. He pointed to a cycle of past overinvestment, which led to price collapses and prompted manufacturers to scale back expansion plans. As a result, when demand for NAND began to surge again, the industry was caught off guard with limited new capacity coming online.
Compounding the issue, starting around 2023, much of the semiconductor industry’s capital shifted toward high-bandwidth memory (HBM) to support AI model training, where profit margins are higher. This left NAND flash with less investment at a time when demand was accelerating, particularly for AI-driven workloads.
AI Inference and Persistent Storage Demand
The shift in cloud computing from AI model training to inference is also reshaping storage requirements. Inference workloads and the need to store large AI models are driving sustained, high-volume demand for NAND flash. As a leading designer of SSD controllers, Phison has unique insight into these evolving trends, often anticipating market shifts well before they become widely recognized.
The industry is already responding. New storage architectures are emerging, bringing flash memory closer to the memory bus to meet performance needs. Inventory levels are tightening, and some suppliers have begun raising prices or suspending discounts in response to the growing demand.
SSD Growth and the Future of Data Center Storage
Pua predicts that SSDs will increasingly dominate bulk storage in data centers as their capacities expand and prices approach parity with traditional hard disk drives, which are themselves experiencing long lead times. If the projected decade-long shortage materializes, data centers will need to invest heavily and consistently in storage infrastructure, reallocating capital to address persistent supply constraints.
The path forward is uncertain. Building new NAND fabrication facilities is a complex and capital-intensive process, and manufacturers may be hesitant to expand capacity while high-bandwidth memory remains more profitable. The industry faces a critical question: how quickly can suppliers ramp up output, and where will the necessary investment come from to close a potentially long-term gap in NAND flash supply?
