The memory market crisis triggered by the AI boom is affecting many related sectors. Manufacturers of solid-state drives are increasingly revising contractual prices and requiring upfront payments from customers for product deliveries. Similarly, the SSD controller developer Phison has acted accordingly.
Phison's business model involves supplying partners with ready-made 'semifinished products' for producing SSDs, which include not just the controllers, but also the necessary flash memory. However, under the current chip shortage, the company has found it difficult to operate under previous conditions. Therefore, as reported last month Taiwanese media, Phison notified customers of the need to tighten its payment policy for products.
Now, Phison requires either full prepayment or expedited payment for deliveries. The company explains that the new policy will help it procure materials more effectively necessary for its own production and increase operational flexibility. The AI boom allowed Phison to nearly triple its revenue year-over-year by the end of January, and increase it by 20% sequentially, reaching a record $331 million.
According to Commercial Times, most NAND manufacturers now require upfront payments from customers for supplied memory. Reports suggest that SanDisk is now asking potential customers who want guaranteed future memory to make full prepayments for one to three years. SanDisk's management recently confirmed that the company is moving towards long-term contracts with customers. Traditionally, NAND supply contracts lasted for one quarter. Theoretically, suppliers can now conclude contracts lasting up to five years, as SanDisk's customers are currently placing orders for 2028. The company expects that this year, the largest market for NAND will be the server segment, with growth rates ranging from 25% to 60%.
Kioxia's profits for the first quarter of this year are expected to increase 26-fold to $2.2 billion, according to forecasts. Orders for NAND supply for the server segment have already been placed not only for the entire next year but also for 2028. Capital expenditures for expanding production of memory sought after in the AI segment are set to increase by 24% this year. The company is also complaining about rising prices for DRAM memory purchased for its own needs. It will need to not only broaden its supplier base but also pass some costs onto customers.
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Source: 3dnews.ru
