NAND flash prices have increased dramatically. Supply and demand are unlikely to ease this year as AI technology giants and large cloud service providers (CSPs) aggressively purchase high-capacity SSDs. At the same time, a severe shortage of fiberglass cloth has also emerged, which is expected to push SSD controller prices upward as well. The NAND shortage will be severe enough to set new record highs for market prices, potentially creating five major challenges for controller manufacturers, who must accelerate their strategies to compete in AI and enterprise server markets.
Controller makers face challenges
The shortage could have a reverse impact on overall demand for SSD controllers. When NAND manufacturers face constrained supply and rising prices, production capacity and shipping resources tend to be concentrated on high-value applications such as CSPs and AI servers, which squeezes NAND allocation for general consumer markets. This could suppress overall SSD shipments and demand.
Furthermore, consumer SSDs will be the most directly impacted segment. As consumer SSD makers face greater difficulty in securing NAND supplies, the market widely expects shipments of PCs, smartphones, and other consumer products to be revised downward, which will also reduce demand for SSD controllers. However, upstream key materials such as fiberglass cloth have also seen rapid price increases.
As overall material cost pressures rise and end-market demand struggles to support price hikes, suppliers will find it harder to pass costs downstream. Unless they have unique specifications or are irreplaceable, downstream customers will have limited ability to accept price increases.
The demand structure for NAND manufacturers will also shift. As NAND suppliers concentrate resources on high-end storage and AI-related applications, their business strategies will lead to a shift in product mix. The number of consumer controllers released through outsourcing could decrease rather than increase, putting the supply chain in a difficult position.
NAND price hikes stem from structural supply shortages across the industry. Although memory suppliers have faced intense procurement pressure from the second half of 2025 through 2026, some companies with strong product portfolios and system integration capabilities may benefit. Controller chips are also raising prices to reflect rising raw material costs and ease procurement pressure through cost pass-through, so improving profitability and growth still requires expanding into advanced technical applications.
Finally, SanDisk was reported to require cash prepayment to secure supply. Buyers have almost no ability to refuse, as they cannot afford to pay large cash sums. As procurement conditions become increasingly stringent, this will drive downward revisions in end-market demand and push up SSD controller prices. However, overall shipments may not be able to keep pace with the memory industry's growth.
High prices despite production growth
It is expected that NAND manufacturers will raise contract prices in the first quarter of 2026, including plans by US-based NAND suppliers to raise contract prices by 100%. Major manufacturers' NAND wafer allocations and pricing are expected to be officially announced in February. There will additionally be continued strict supply controls during the transition period, so spot market prices continue to rise.
NAND flash bit growth is expected to reach around 20% in 2026, but the overall NAND market value could increase significantly by more than 60–70%. Price increases were originally expected to moderate in 2026, but AI applications have continued to expand the supply-demand gap. Whether in SSD storage applications or controller chips, companies are accelerating their shift toward the larger AI market.
Article edited by Jack Wu
