Phison Electronics warns that the NAND industry will face bankruptcy risk

Over the past few months, the global economic downturn, declining consumer market demand, high industry inventory, and cyclical factors have led to a significant drop in NAND flash memory prices, with even large-scale suppliers like Samsung facing production cuts.

According to Digitimes, Phison Electronics CEO Pua Khein-Seng stated at a recent meeting that further reductions in NAND flash memory prices are impossible, and if the market does not recover soon, some suppliers may face bankruptcy. Despite the challenging market environment, Phison Electronics remains focused on the development of controller chips and continues to invest heavily in research and development.

Industry insiders estimate that major manufacturers of 3D NAND flash memory, including Samsung, SK Hynix, Kioxia, Micron, and Western Digital, have already lost over $10 billion on NAND flash memory, forcing them to cut production. Phison Electronics did not specify which manufacturers might face bankruptcy, and it is not even clear whether this includes SSD brands. However, 3D NAND flash memory manufacturers may choose to further reduce output to stabilize or even raise prices. Micron has already stated it will not reduce NAND flash memory prices, which is largely a result of collective efforts within the supply chain.

Phison Electronics does not intend to lower the quotations for its controller chips in order to maintain its gross margin, with a long-term target of 27% (±3%), while seeking to continue expanding its market share. Phison Electronics’ consolidated revenue for the first quarter of this year was NT$10.078 billion, down 18% compared to the previous quarter. However, thanks to successful product strategies, its gross profit was NT$3.202 billion, with a profit margin of 31.78%, setting a new quarterly record.