Hua Er Jie Jian Wen·2026-02-17 08:21Core Insights - The storage industry is entering a "once-in-a-lifetime" super cycle driven by the AI boom, with demand for storage chips skyrocketing due to the requirements of AI applications [1][16]. - Phison Electronics, a leader in NAND flash memory controllers, is at the center of this supply-demand battle, indicating that the market is not just facing shortages but a life-and-death struggle from cloud to endpoint [3][4]. Supply and Demand Dynamics - The demand for storage is quantitatively staggering; for instance, NVIDIA's new GPU, Vera Rubin, requires over 20 TB of SSD per unit, which could consume 200 EB of storage if 10 million units are sold, equating to 20% of last year's global NAND Flash production [4][22]. - The current supply-demand imbalance has led to unprecedented pricing and contract terms, including a requirement for buyers to prepay three years' worth of cash for flash memory, a first in the industry [5][29]. Market Impact on Consumer Electronics - The AI-driven demand for storage is severely impacting traditional consumer electronics, with predictions of a reduction in global smartphone production by 200 to 250 million units this year, alongside significant declines in PC and TV shipments [9][30]. - The cost of components has surged dramatically; for example, the price of an 8GB eMMC chip has skyrocketed from $1.5 to over $20, significantly affecting the bill of materials (BOM) for consumer products [10][31]. Long-term Shortages and Production Challenges - Major manufacturers like Samsung and SK Hynix are adopting a cautious approach to expansion due to past losses, with industry experts predicting that the current shortages could last until 2027 or even 2030 [12][36]. - The physical limitations of production capacity and equipment shortages are exacerbating the situation, as the semiconductor equipment supply is limited and the ramp-up time for new facilities is lengthy [13][43]. Future Opportunities in Space Computing - There is potential for space applications to alleviate some of the AI computing bottlenecks, as space environments can provide solutions for power and cooling challenges faced by terrestrial data centers [14][45]. - Successful developments in this area could lead to significant growth in the next 2-3 years, although the high reliability requirements for space applications present substantial challenges [15][48]. Strategic Positioning of Phison Electronics - Phison is focusing on high-value solutions and long-term investments in R&D, with a 50% increase in R&D spending this year, aiming to transition from a low-margin player to a provider of high-value solutions [16][52]. - The company is leveraging its expertise in AI and space applications to differentiate itself in a highly competitive market, emphasizing the importance of maintaining strong relationships with upstream suppliers [60][62].