K. S. Pua, chief executive of Phison Electronics, said at a recent conference that further NAND price cuts were not viable and warned of potential bankruptcies among suppliers if the market does not recover. Despite the challenging market conditions, Phison remains focused on the development of NAND controllers, and will keep investing heavily in research and development, DigiTimes reports
Leading makers of 3D NAND — Kioxia, Micron, Samsung, SK Hynix, and Western Digital — lost over $10 billion in flash memory as the companies had to cut down prices of already produced ICs, according to some estimates. Pua asserts that further price cuts are infeasible and cautioned that some suppliers may face bankruptcy if prices continue to decline, though he did not elaborate on whether he expects 3D NAND producers or SSD suppliers that buy flash memory to become insolvent.
The head of Phison also suggests that there is a good chance that 3D NAND makers will further cut output to stabilize or even increase prices. In particular, Pua sees Micron's decision to stop cutting NAND prices as a collective effort among suppliers to stabilize the market. Phison, which develops controllers for some of the best SSDs available today, intends to refrain from future price cuts to maintain its gross margin, with a long-term goal of 27% (+/-3%), while continuing to expand its market share.
Phison's Q1 revenue was NT$10.078 billion ($328.64 million), an 18% decrease from the previous quarter. However, due to a reduction of low-margin products and a better product mix, the company's gross profit reached NT$3.202 billion and the margin was 31.78%. Unfortunately for Phison, the company posted a loss of NT$550 million from its investment in Hosin Global Electronics, a supplier of SSDs and other NAND and DRAM-based products.
The chief executive of Phison anticipates losses of NAND suppliers to persist in the second quarter of 2023. But he sees them as a short-term challenge, so the company remains committed to maintaining its innovative edge and focusing on client services. To this end, the company will continue investing heavily in research and development, allocating over 80% of its annual expense budget to R&D. KS Pua reportedly said that while some of its rivals have cut their R&D spending, it has increased its investments in future products by 20%.
