The implications of the AI data center boom continue to mount ever higher by the day. Pua Khein-Seng, CEO of Phison Electronics Corporation, claimed in a recent interview that NAND flash shortages forecasted to arrive in 2026 will linger for the next ten years. The estimate from the Phison boss long outstretches the current estimates of a one-year storage squeeze from other industry insiders.
In an interview with Taiwanese CommonWealth Magazine's tech column, Pua reaffirms and increases the expectations of market analysts who claim that a "supercycle" is imminent for the memory world. "NAND will face severe shortages next year. I think supply will be tight for the next ten years," says Pua.
"In the past, every time flash makers invested more, prices collapsed, and they never recouped their investments. So companies slowed spending starting around 2019–2020. Then in 2023, Micron and SK Hynix redirected huge CapEx into HBM because the margins were so attractive, leaving even less investment for flash."
As flash demand and pricing fell for the last few years, it is now seeing a major boom, resulting in some monumental wins across the memory market. As TrendForce reported in September, SanDisk, Micron, and Western Digital all announced price freezes or hikes across their flash portfolios as demand swelled to "unprecedented" levels.
As with most hardware trends in the last few years, the culprit for this demand is the AI data center boom. Storage demands have seen huge spikes in recent days, as more companies are pivoting to prioritizing inferencing LLMs over just training workloads, and nearline storage needs have increased. Nearline storage, a sort of "warm" storage that exists between hot and cold storage uses, is increasingly necessary as AI models grow in size and the data needs of corporations rise, useful for storing past revisions of models to retrain on, holding old queries, or hosting seldom-accessed user data.
While DRAM-based HBM memory has been the prime cut for AI buyers hungry for training power, Pua claims flash will soon outpace it in necessity. "Since 2022, cloud companies have been scrambling to secure GPUs, mainly to train models. Training uses HBM and has little to do with flash. Now those models appear to have matured. After burning through so much capital, how will cloud companies make money back? Through inference.
"In my view, those multi-billion-dollar capex plans by cloud providers won’t be entirely bet on GPUs; an even greater share will go into storage. To make money, you need users. Users create data. Data needs to be stored. Which means data centers must expand storage for the next decade. After all, a data center’s core function is storage."
The industry is also starting to bet against the future of HDDs. While hard drives are currently priced at attractive levels for high-capacity nearline storage use, SSD prices are expected to match those of HDDs in the next five to eight years. Add to that the fact that HDD lead-times are up to over a year out from some providers, and flash SSDs will surely become the standard buying choice all across the industry for bulk storage needs, says Pua.
"In 2020, the SSD-to-HDD ratio in data centers was in the single digits versus more than 90%. Today, it’s about 20% to 80%. Looking ahead, SSDs will account for 80% to 100%. The real question is: how much new capacity will be needed to support that transition? That’s why I say flash will remain strong for the next ten years."
As SSD capacities continue to grow in size and shrink in cost, and the biggest AI buyers move towards prioritizing storage over the HBM-memory-centric GPU arms race, Pua's words may prove prophetic. U.S. bank Morgan Stanley has begun tipping its clients off to the same upcoming "memory supercycle", helped along by a continued need for HBM and China's threat to enter the HBM market in the next two years. The full interview with Pua Khein-Seng continues to focus on this competitive market and its implications for the ten-year prediction.
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