SanDisk (SNDK.US): Price increase, and full payment is required!

The storage chip market is undergoing a dramatic change in supply caused by the AI wave, with a strong return of the seller's market forcing buyers to accept unprecedented harsh terms. According to various sources such as the technology media Digitimes, supply chain insiders revealed that SanDisk (SNDK.US) has proposed a contract to some downstream customers that is called "unheard of" in the industry: requiring customers to pay full cash advance payments to lock in future supply quotas for 1 to 3 years. Despite the strict terms, facing the rigid demand for storage devices in AI infrastructure construction, some cloud service providers (CSP) are considering accepting these conditions to avoid future supply risks. At the same time, price fluctuations are imminent. According to a customer report released by Nomura Securities, SanDisk plans to increase the price of its high-capacity 3D NAND flash memory chips for enterprise-grade solid-state drives (SSDs) by more than 100% month-on-month in March. Nomura Securities pointed out that this price increase is attributed to short-term supply shortages and mid-term demand growth for server-level storage in the AI field. On Friday, SanDisk's stock price surged by 13% once again, reaching a new historical high. Cash is king: Unprecedented full payment prepayment system Since 2025, NAND major SanDisk has frequently launched price hikes, and the recent "lock order" requirement has broken industry conventions. Supply chain sources said that SanDisk's proposal of a "100% cash prepayment" clause is aimed at securing 1 to 3 years of supply guarantees. This unconventional form of contract has caused a stir in the industry. Usually, supply chain cooperation often involves installment payments or credit terms, and full prepayment presents a huge challenge to the buyer's cash flow. However, due to the continuous growth in AI demand and the long time required for storage original factories to expand production, some cloud service providers urgently needing to increase computing power have to consider accepting this term. In addition, SanDisk has also expanded negotiations of such contracts to PC, smartphone, and module manufacturers. Prices doubling: Enterprise storage leading the way While requiring full payment, product prices are also soaring. Nomura Securities' channel survey shows that multiple storage suppliers continue to raise prices, with the most aggressive increase seen in enterprise-level NAND. Nomura Securities clearly stated in the report: "SanDisk's NAND pricing for enterprise-grade SSDs may increase more than 100% month-on-month in March." Nomura Securities' analysis indicates that NVIDIA Corporation's inference context memory storage (ICMS) platform is one of the key factors driving enterprise storage demand this year. This platform is based on the BlueField-4 DPU and is equipped with a 512 GB SSD. It is estimated that if NVIDIA Corporation ships 50,000 VR NVL144 racks per year, this alone would require about 0.439 EB of 3D NAND. Although it is not clear how much the doubling of enterprise-level product prices will affect the consumer market, Nomura Securities warns that since the 3D NAND used in smartphones and PCs is produced in the same wafer factory as the enterprise-level chips, consumer product prices generally follow the increase in enterprise-level products. Capacity squeeze: Supply crisis under AI priority The fundamental reason for the current situation lies in a fundamental shift in the production capacity allocation strategies of the three major global storage original factories (Samsung, SK Hynix, Micron). According to related analyses, the original factories have shifted most of the production capacity to the higher-profit HBM (High Bandwidth Memory) used mainly for the AI market, leading to a significant reduction in the production capacity originally used for standard DDR4/DDR5 and NAND. This structural shortage has caused chaos and panic in the supply chain: Tech giants are scrambling for goods: It has been reported that Alphabet Inc. Class C's TPU is extremely dependent on HBM, and when seeking additional production capacity from SK Hynix and Micron, they received an "impossible" response. As a result, Alphabet Inc. Class C has even fired a purchasing manager responsible for storage supply and is hiring a specialized global storage commodity manager. Meta also plans to hire a specialized "global storage procurement manager" to strengthen direct contacts with upstream wafer factories. Panic hoarding: To avoid price increases and shortages, PC brands like Lenovo have begun actively hoarding inventory and even placing orders for their entire 2026 annual demand in advance. Chaos ensues: There are market reports of Samsung headquarters quietly sending staff to Taiwan to investigate suspected bribery issues involving employees and agents, indicating that in the extreme shortage situation, the market is seeing irregular profit-seeking behavior. Currently, more financially powerful buyers are beginning to abandon traditional long-term contract models in favor of short contracts and high prices, and there are even instances of "buying as long as there is stock, regardless of price."