Phison CEO warns of manufacturer deaths and a long crisis
If the current trend continues, the memory crisis could extend into 2030 or even beyond.
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More and more manufacturers are apparently preparing for a prolonged memory shortage. Phison CEO Khein-Seng Pua believes that this could lead to the collapse of various small manufacturers as early as 2026.
Phison is a heavyweight in the SSD industry with good connections: the company not only manufactures controllers but also entire SSDs that companies sell under their own brand. The CEO's statements in a good hour-long video therefore have substance. The conversation is in Chinese; an X account has shared numerous segments. We had the machine translations in this report confirmed by a native speaker.
Memory crisis possible until 2030 and beyond
According to Phison's internal forecasts, the imbalance between supply and demand for memory chips could persist until at least 2030. This would mean: memory will remain scarce for several more years, and manufacturers will be able to dictate prices. For main memory (DRAM), market power is concentrated among three manufacturers: Samsung, SK Hynix, and Micron. They account for over 90 percent of global DRAM production. For NAND flash, used in SSDs among other things, there are a few more manufacturers like Kioxia and Sandisk.
The memory crisis has now reached almost all types of memory: from DDR5 modules in desktop PCs and LPDDR5X for notebooks and smartphones to SSDs and HDDs.
Manufacturer exodus
Small manufacturers in particular face two problems. Firstly, it is becoming increasingly difficult for them to obtain memory at all. Secondly, according to the Phison CEO, payment models have changed. Previously, customers could pay for memory chips, for example, after soldering them onto SSDs and then selling them. Now, customers are expected to pay for the chips in advance, sometimes with three-year framework agreements. If a manufacturer does not have equity capital for this, they will likely go bankrupt.
The discrepancy between SSD manufacturers with and without their own memory production is already evident in German retail. For Samsung, price increases of about 50 percent are observed for models with up to 2 TByte capacity. For Kingston, Lexar, and Patriot, without their own memory components, prices have sometimes skyrocketed by a factor of 3.
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Fewer devices in the long term
The bottlenecks will affect all devices sooner or later. Pua estimates that 8 GByte of embedded flash memory (eMMC) cost US$1.50 in 2025. Now, such a component is said to have reached US$20. Specially certified types are even more expensive; car manufacturers, for example, are said to pay US$30.
Pua expects electronics manufacturers to reduce the production of many device types. Specifically, he anticipates 200 million to 250 million fewer smartphones annually, which would correspond to about 15 to 20 percent of global production. The Phison CEO also expects significant declines in PCs (including notebooks) and televisions.
AI bubble
The reason for the memory crisis is the enormous demand from hyperscalers for their AI data centers. The concept of supply and demand no longer works: normally, high prices would lead to a decrease in demand, which should then stabilize prices again. Now, however, hyperscalers are buying up everything available, regardless of the cost.
Due to previous so-called hog cycles, memory manufacturers are hesitant to expand production. The last such turnaround occurred in 2023: the high demand from the Corona pandemic collapsed abruptly, which led to billions in losses. Samsung, SK Hynix, and Micron have incurred losses with DRAM production.
Memory production in new semiconductor plants is expected to start towards the end of 2027. However, it is questionable whether the capacity increase will be sufficient to significantly improve the current situation. Various chip manufacturers and hardware manufacturers do not believe that the AI bubble will burst in the coming years.
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