It's only been a couple weeks since Phison's CEO said that at least one NAND foundry was asking its customers for upfront cash payments. Now the squeeze on NAND suppliers has come for Phison itself.
In a letter sent to its customers, Phison states that "[its] key suppliers have recently adjusted their payment requirements as advance payment or shorten payment" (sic), and that the firm has been "extending financial support for [customers'] orders over the past period".
This seemingly translates to Phison having already paid some of its NAND suppliers upfront, and is now in the unenviable position of passing the pain to its clients.
Phison is mostly known as an SSD controller maker, but a core part of its business is making actual drives for enterprise and automotive customers, among others.
This move is harsh but not unexpected, given various reports illustrating the meteoric rise of NAND flash pricing over the last few months. Current pricing can be roughly estimated as somewhere between 3x and 4x what the chips were going for in Q2 2025, and there's no word on any near- or even mid-term stabilization.
The shortage has reportedly led SanDisk and Kioxia to start demanding pre-payment for long-term NAND contracts, in a similar move to DRAM makers. Samsung, the largest player in the flash world, has apparently moved to quarterly NAND pricing renegotiations, and it wouldn't be entirely surprising if the Korean mogul joined its colleagues in the move to demanding pre-payment.
The wording on Phison's letter isn't specific about which type of clients will asked for pre-payment and which will face shorter payment windows, suggesting Phison will evaluate terms on a case-by-case basis. It's not hard to imagine that the company will prioritize allocations and perhaps extend more generous terms to larger customers, seeing as the letter mentions the usual "rapid changes from AI infrastructure".
