NAND Flash Finds New Value in Volume

At our recent Investor Day event, we discussed how the NAND flash market is entering a new economic reality. The data center is now the industry’s largest source of demand, while edge markets, in the form of PCs and smartphones, are shifting toward premium models. At the same time, advances in NAND technology are enabling increases in bit output even with wafer capacity substantially below its 2022 peak. Together, these changes are reshaping a market historically defined by commodity pricing and cyclical swings and creating a substantially larger revenue opportunity.

As part of my Investor Day presentation, I shared Sandisk’s projections that flash unit shipments will reach 1.2 zettabytes in 2026. Understanding how the industry gets there begins with a look at the forces that drove flash memory’s earlier growth.

Where We’ve Been and Where We’re Heading

For much of NAND’s history, growth centered on consumer and edge applications. By the mid-2010s, annual smartphone shipments had scaled to approximately 1.5 billion units, while PCs were steadily transitioning storage from hard disk drives to flash, and enterprise SSDs were emerging as another major source of demand.

That trajectory changed with the launch of ChatGPT in 2022, accelerating the AI infrastructure buildout and dramatically increasing the data center’s share of NAND consumption. Data centers accounted for about 20% of flash bits in the early 2020s and 30% last year. Today, that stands at 50%, making data center the largest flash segment.

A shift in demand also impacts the economics of NAND flash.

Historically, NAND behaved as a commodity. Bit volume steadily increased, but declining average selling prices offset much of those gains. The result was an industry that averaged approximately $60 billion in annual revenue, with market cycles generally moving about $20 billion above or below that level. Sandisk estimates that total revenue growth during this period averaged only about 4%.

Today, we see a different dynamic. Flash has become a critical component of a multi-period data center buildout, resetting the industry’s historical revenue baseline. As a result of this dramatic increase in demand, we expect the flash market to exceed $300 billion in 2026 and approach $500 billion in 2027. 

Supply-Side Economics Are Evolving, Too

The changing economics of NAND are not limited to demand. During the late 2010s, when Sandisk estimates the average targeted annual bit growth was above 30%, meeting demand required substantial wafer-manufacturing investment.  capacity eventually reached approximately 1.83 million wafers per month in 2022.

That expansion collided with the subsequent inventory correction. When demand expectations failed to materialize, manufacturing capacity utilization fell to roughly 70%. Sandisk estimates that about 560,000 wafers of monthly capacity were retired as a result of demand, resetting total capacity to approximately 30% below the 2022 peak.

Yet bit production continued to grow. Even with the reduced manufacturing footprint, bit growth was in the mid- to high-teens, achieved through NAND nodal migrations. The implication is important: additional flash supply can be generated through technology transitions at existing wafer-capacity levels.

Cloud Investment Keeps Moving Higher

On the demand side, Sandisk continues to see strong signals from cloud infrastructure investment.

Since the start of 2023, capital-spending forecasts for selected U.S. hyperscale and neocloud companies have been revised upward for 15 consecutive quarters. Current projections put spending at $842 billion in 2026 and nearly $1.1 trillion in 2027 – approximately $1.9 trillion over the two years.

Sandisk also sees growing evidence of this trend continuing. Amazon recently said it expects demand to outstrip capacity in 2026 and 2027, with significant demand already emerging for 2028. Amazon also suggested that AWS could eventually become a $1 trillion annual revenue business. For flash, continued AI infrastructure investment is translating into growing storage requirements as inference workloads and KV-cache requirements ramp.

Edge Moves Upmarket

At the edge, PCs and smartphones are undergoing a different transition. Sandisk expects unit shipments in both markets to decline in the mid-teens year over year, with the reduction concentrated primarily in low-end devices.

Rather than weakening the overall opportunity, we expect OEMs to shift their product mix toward premium offerings, selling fewer units at higher average selling prices and supporting continued revenue growth in 2026 and 2027. Recent earnings from major OEMs showed year-over-year revenue increases ranging from 13% to 24%. Sandisk’s analysis also points to mobile customers reducing their low-end units by more than 200 million in 2026.

A New Flash Market Takes Shape

In aggregate, these trends define what Sandisk sees as a new flash reality. Data center now accounts for the majority of NAND bit demand. Edge growth is increasingly carried by premium and AI-enabled devices rather than unit volume. And on the supply side, nodal migrations are enabling continued bit growth from manufacturing footprint that remains well below its previous peak.

For an industry historically characterized by falling ASPs and recurring commodity cycles, the combination of strong demand and technological advances in supply capabilities represents a markedly different economic model – and gives us confidence that the historical revenue baseline for flash is being reset.

Download my presentation materials and refer to sources cited for the information in this post here.

Disclaimers

This post contains forward-looking statements within the meaning of federal securities laws, including statements regarding future market size, demand, capital spending, product mix, unit shipments, supply, capacity, technology transitions and revenue. These forward-looking statements are based on management's current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those predicted. Key risks and uncertainties include: changes in AI infrastructure investment and customer demand; volatility in NAND supply, demand and pricing; execution of technology transitions and manufacturing plans; and other risks and uncertainties listed in the Sandisk’s filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K filed with the SEC on August 17, 2026.