Amid the global scramble for AI infrastructure capacity, an increasing number of memory chip categories are facing tight supply, with the supply-demand gap widening due to production shifts. As major international manufacturers like Samsung, Kioxia, and Micron collectively exit the MLC (Multi-Level Cell) NAND flash market, this once-unassuming "veteran" product has seen its prices skyrocket by approximately 300% recently. The resulting supply gap is posing potential impacts on industries such as automotive electronics, industrial control, and medical equipment. The development trajectory of the NAND industry involves capacity expansion through vertical stacking. MLC, as the name suggests, typically employs two-dimensional planar stacking, known as 2D NAND. The industry mainstream has now evolved to TLC (Triple-Level Cell) and QLC (Quad-Level Cell) stages, entering the realm of 3D NAND. Consequently, it's evident that upstream memory suppliers' decision to gradually discontinue MLC is driven by both considerations of product iteration and the desire to allocate more capacity to products with higher profit margins. As overseas giants phase out production, this presents certain development opportunities for domestic supply chain players.
Price Hikes and Supply Disruption Under conditions of overall limited production capacity, upstream memory manufacturers are exiting low-margin markets, with MLC NAND being among them. Recently, Kioxia announced the discontinuation of some older-generation products, including small-capacity TSOP-packaged products, certain traditional Floating Gate 2D NAND, and third-generation BiCS FLASH products, which will gradually exit the market. TSOP packaging is primarily used for low-capacity MLC NAND Flash memory. Some analysts believe Kioxia's announcement indicates its potential exit from this market. In response, Seiji Okamoto, Chairman and President of Kioxia China, stated that this decision is based on considerations of technological transition, a common phenomenon in the industry. Beyond Kioxia, Samsung, SK Hynix, and Micron have previously announced that MLC-related products are entering end-of-life stages, with no further expansion of related production lines. According to research by TrendForce, SK Hynix and Micron have largely capped MLC production at levels sufficient to meet existing customer demand, showing little motivation for expansion. Consequently, global MLC NAND flash production capacity in 2026 is projected to decline by 41.7% year-on-year, further exacerbating the supply-demand imbalance. An industry professional noted that it is a normal industry practice for upstream memory manufacturers, driven by technology iteration and profit objectives, to phase out products based on older process nodes as part of lifecycle management. Simultaneously, concentrating premium capacity on high-value-added areas like enterprise storage is a prevailing trend. Against this backdrop of extremely limited capacity, prices for "aging" products like MLC NAND have begun to surge dramatically. An analyst from CFM Flash Market pointed out that supply of consumer-grade MLC eMMC from original manufacturers has essentially ceased, and Samsung's automotive-grade MLC supply will stop in the first quarter of next year. This has led to sharp price increases for MLC eMMC in the spot market, with 8GB eMMC reaching extreme prices as high as $110. A senior analyst from Counterpoint Research noted that their Monthly Memory Tracker data shows MLC NAND prices have risen approximately 300% year-on-year. For instance, the price for 16Gb MLC NAND is projected to increase from around $3.2 in Q1 2025 to about $12.9 by Q2 2026. "This round of price increases is primarily driven by supply-demand imbalances triggered by the ongoing end-of-life (EOL) process for MLC products," the analyst further explained. The core reason for the rapid price surge is the significantly accelerated EOL pace. "Historically, EOL typically occurred gradually over several years, but this round of MLC NAND phase-out has been compressed to about one year. Concurrently, rapidly growing AI demand is shifting capacity towards server-related products, further intensifying MLC supply tightness." End demand for MLC NAND mainly comes from sectors like industrial control, automotive electronics, medical equipment, and networking/communications, where requirements for product reliability, write endurance, and long-term supply commitments are extremely stringent. The automotive industry is among the most significantly affected. An analyst indicated that automotive-grade MLC eMMC is primarily used in areas like T-BOX, instrument clusters, HUDs, and low-to-mid-range cockpit systems. "Applications using MLC generally have low performance and capacity requirements, often not needing high-capacity UFS; sufficiency is key. However, the validation cycle for automotive-grade chips and modules is very long, and the mass-production lifecycle for automotive components is typically at least 3-5 years. Automakers negotiate annual prices and supply with original manufacturers on a yearly basis, making them less sensitive to immediate fluctuations in AI storage supply and demand. They previously underestimated the severity of the storage shortage and the manufacturers' determination to halt MLC lines to concentrate capacity on high-value server storage, making the automotive sector particularly vulnerable to storage price hikes and shortages."
Domestic Substitution and Commercial Shift Facing the MLC supply disruption, some capable manufacturers have begun to take action. TrendForce noted that as the long-term supply system for MLC NAND Flash faces a fracture, Macronix, which has long focused on the embedded and high-reliability memory markets, holds a relative advantage in meeting this niche demand. Macronix has reduced its original NOR Flash capacity to expand MLC NAND Flash supply. An analyst pointed out that the current 2D NAND supply gap is difficult to fully bridge. "Among domestic manufacturers, Yangtze Memory Technologies Co., Ltd. (YMTC) possesses the relatively largest available capacity. However, it will also prioritize meeting server-side demand for TLC and QLC products to capture structural opportunities brought by AI, leaving limited room to alleviate the MLC shortage." Naturally, following conventional patterns, end markets will eventually adopt newer generation technologies and products. Therefore, transitioning to TLC products with more advanced processes is becoming a trend. An analyst mentioned that besides Kioxia continuing to supply automotive-grade eMMC until 2028, domestic memory manufacturers are also attempting to fill part of the supply gap through their own design and tape-out efforts for MLC. Simultaneously, the automotive industry is accelerating the validation and adoption of 64GB TLC eMMC/UFS. "Downstream MLC NAND applications will indeed gradually migrate to TLC," an analyst stated. Unlike traditional DRAM, which remains crucial in long-lifecycle infrastructure like automotive, MLC NAND has been surpassed in performance by SLC and replaced in cost-efficiency by TLC and QLC, seeing its competitive advantage squeezed from both sides. "The downstream market has already begun migrating to TLC and QLC to reduce costs. As upstream MLC supply continues to tighten, this substitution trend is expected to accelerate further." However, the analyst also noted that the resulting increase in BOM costs will squeeze downstream manufacturers' profits, with industrial and embedded suppliers serving network equipment makers and large OEMs being the most affected. TrendForce also mentioned that in the long term, growth in MLC NAND's main end markets is limited. Furthermore, if some applications accelerate the adoption of enhanced TLC solutions, or if the overall NAND Flash market sentiment reverses significantly, MLC product prices could still face indirect pressure. The transformation of MLC NAND from a "commodity" to a "niche luxury item" epitomizes the reallocation of resources within the memory industry in the AI era. With limited capital expenditure and cleanroom space, upstream manufacturers are decisively shifting capacity towards higher-margin products like HBM and high-layer-count 3D NAND. Meanwhile, mature memory products that once supported the stable operation of实体经济实体 industries like automotive, industrial control, and healthcare are being phased out more rapidly due to their lower per-unit output value. This trend is difficult to reverse in the short term, forcing downstream end markets to accelerate technological substitution and supply chain restructuring. For domestic memory manufacturers, whether they can gain customer trust through stable supply capabilities and reliable product quality in the gaps left by overseas giants' exit, and find breakthroughs for independent innovation amidst patent barriers, will determine if China's memory industry can truly gain a firm foothold in this global landscape reshuffle.
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