Phison: AI demand could end NAND memory boom-bust cycle

Phison, a major controller provider for NAND flash memory, suggests that the increasing demand for artificial intelligence (AI) applications could fundamentally alter the historical boom-bust cycles in the NAND memory market. This indicates a potential shift towards more consistent and predictable demand for memory products, moving away from the volatile fluctuations seen in previous cycles.

This development matters because the NAND memory market has historically been characterized by periods of oversupply leading to price crashes, followed by undersupply and price surges. A more stable demand profile, driven by AI's continuous need for data storage and processing, could lead to more consistent revenue and profitability for memory manufacturers, reducing market volatility.

The mechanism behind this potential shift is the sustained buildout of data centers and specialized AI infrastructure. AI models require vast amounts of data for training and inference, necessitating high-capacity and high-performance NAND storage. This ongoing demand from AI applications is expected to provide a more stable baseline for memory consumption, smoothing out the traditional cyclical swings.

This potential structural change could positively impact NAND memory manufacturers like Samsung (005930.KS), Micron Technology (MU), and Western Digital (WDC), as well as other related hardware providers involved in data center infrastructure. Companies that supply components for AI servers and data storage solutions may also see more stable demand for their products.