NAND Prices Jump 500%, Prepayments Required

NAND flash prices continue to surge, and supply remains tight across the market. Against this backdrop, Phison Electronics has informed customers that it will adjust its payment terms, citing a sharp rise in working capital requirements driven by escalating NAND costs.

Since the second half of 2025, NAND contract prices have doubled in multiple rounds, with cumulative increases reportedly reaching as high as 500% over the past six months. Earlier, U.S.-based NAND manufacturer SanDisk required downstream customers to prepay in full to secure supply for the next one to three years, signaling a fundamental shift in transaction structures across the storage ecosystem.

Phison noted in a customer communication that rapid changes in AI infrastructure deployment are accelerating NAND demand. As hyperscale data centers expand and AI servers scale up, upstream NAND makers have tightened payment cycles or introduced advance payment requirements. This has effectively pushed more financial pressure down the supply chain.

To maintain supply continuity and avoid disruptions, Phison stated that future orders will be handled on a case-by-case basis with prepayment or earlier settlement arrangements. The company emphasized that these measures are designed to secure upstream wafer allocation more effectively and enhance operational flexibility amid volatile pricing.

Industry sources indicate that Phison began notifying customers of the revised payment model before the Lunar New Year. As NAND prices climb, cost pressure in consumer-oriented applications is intensifying. Some customers focused on lower-margin consumer markets are reportedly struggling to secure supply, suggesting that allocation may increasingly favor higher value-added segments such as enterprise and AI-related storage.

Phison stressed that it is working closely with customers to ease capital planning challenges while ensuring sufficient procurement capacity from upstream NAND manufacturers. Advance payments, the company explained, will help lock in supply earlier in the procurement cycle.

The updated payment structure does not reflect a reduced willingness to ship products, but it may influence supply prioritization. According to market feedback, several customers have acknowledged the change and expressed understanding of the need for greater financial commitment in order to secure stable NAND supply in the current environment.