Facepalm: Kioxia, a company spun off from Toshiba in 2018 and credited with inventing flash memory, predicts that the memory market will be influenced by AI-related investments for at least the next two years. Worse yet, consumers can expect to pay higher prices for the same products.
Kioxia is working to significantly enhance storage performance for AI workloads in the enterprise market. Unfortunately for individual consumers, that same focus is driving up prices for traditional storage products.
Shunsuke Nakato, managing director of Kioxia's memory division, recently confirmed that the company's NAND Flash output for this year is already sold out. Speaking at an event in Seoul, Nakato discussed the current "supercycle" of AI-driven spending, which he expects to continue at least through 2027.
For consumers, the biggest impact of the AI boom is the disappearance of affordable SSDs. Nakato reportedly believes that the era of 1TB flash drives costing less than $50 is over. The memory industry is no longer prioritizing affordability, as enterprise demand is straining the NAND supply chain and reshaping the market.
Kioxia's executive said the memory industry is now singularly focused on AI, driven more by hype than practical utility. Organizations are discovering that AI delivers limited value in many corporate environments, yet investment continues unabated, fueled by unprecedented FOMO.
Big Tech and high-profile AI startups, including OpenAI, are reserving ever-increasing amounts of chip production, leaving Kioxia facing the same supply challenges confronting other memory manufacturers. Nakato explained that the company cannot simply ramp up output to meet the growing orders.
To manage demand, Kioxia is negotiating with long-term partners to allocate its annual chip production, rather than prioritizing the highest bidder. In some cases, supply has increased slightly, Nakato said, but prices have risen as much as 30 percent.
Looking ahead, Kioxia expects its business to expand significantly in the coming months and years, with price increases likely playing a major role. Memory manufacturers are effectively setting their own prices, while Big Tech companies scramble to secure every available chip to power ambitious AI data center projects.