NAND flash supply to exceed demand in H2 2027, TrendForce says

TrendForce has become the first major research house to call the end of the current NAND flash upcycle, forecasting supply to overtake demand in the second half of 2027.

The NAND flash market will swing from a 4% to 5% supply deficit in 2026 to a surplus in the second half of 2027, ending nearly two years of steep price increases, TrendForce said.

"Supply tightness is expected to diminish in the latter half of 2027 as process migrations boost bit output and consumer demand remains weak," the Taipei-based research firm said in its July NAND Flash report.

Servers now account for more than 40% of total NAND flash bit demand, with shipments of Intel Corp. and Advanced Micro Devices Inc. next-generation platforms expected to drive 17% growth in server units this year. The ramp is accelerating in the second half of 2026 as component availability improves, including a significant easing of server CPU supply constraints and more stable memory supply under long-term supply agreements. But smartphones and notebooks, which together represent nearly 40% of demand, are contracting. Smartphone production is forecast to fall 15% to 20% in 2026, while notebook shipments are set to decline roughly 10%, TrendForce said.

The reversal carries significant implications for memory chipmakers including Micron Technology Inc., Samsung Electronics Co. and SK Hynix Inc., which have enjoyed sustained pricing power during the upcycle. Average selling prices are expected to contract as supply growth outpaces demand, compressing margins across the industry.

Chinese Suppliers Emerge as Wild Card

Chinese NAND flash manufacturers are expected to boost production capacity significantly as new manufacturing equipment comes online, raising their share of global bit output to nearly 19%, TrendForce said. That additional supply could accelerate the timeline to surplus. Korean, US and Japanese suppliers are also upgrading existing production lines and selectively expanding output at current facilities to increase market supply.

The forecast contrasts with more dire warnings from elsewhere in the industry. Silicon Motion Technology Corp. recently cautioned that 2027 would be the worst year yet for NAND availability as cloud companies receive priority over consumer products. Adata chairman Chen Li-bai has said DRAM shortages could persist for another decade, calling memory and electricity the world's two scarcest resources. SK Hynix has predicted the memory crunch will peak in 2027 and continue through 2030, while Micron also expects shortages to stretch beyond 2027.

The supply crunch has already spurred architectural innovations to overcome memory bottlenecks. Surging KV Cache demand in the first half of 2026 collided with constrained memory supply, prompting leading chipmakers and cloud providers to pursue both hardware and software solutions. Penguin Solutions, Marvell Technology Inc. and Meta Platforms Inc. have introduced KV Cache servers and CXL switches to expand the memory hierarchy and increase effective capacity. Nvidia Corp. and Google have developed technologies such as KVTC and TurboQuant to compress KV Cache and reduce memory consumption.

For investors, the divergence between NAND and DRAM outlooks creates a differentiated opportunity. Micron, which derives roughly 30% of revenue from NAND through its Micron and Lexar brands, faces ASP compression in the second half of 2027, while Samsung and SK Hynix benefit from more diversified memory portfolios. The NAND glut timeline also pressures Western Digital Corp. and Kioxia Holdings Corp., which are more exposed to NAND pricing cycles. TrendForce's forecast suggests the current upcycle has roughly 12 to 18 months of pricing power remaining before the market resets. Module makers have accumulated higher inventories due to weak consumer demand, while inventory held by other customer groups remains largely under control, suggesting the transition to surplus may be gradual rather than abrupt.

This article is for informational purposes only and does not constitute investment advice.