NOR Flash and SLC NAND Face Severe Undersupply Due to AI Boom's Impact on Memory Production

Memory Chip Production Shift

The current AI boom is significantly impacting the memory chip market, causing a redirection of manufacturing capacity. Investment and production are heavily focused on high-margin memory types such as High Bandwidth Memory (HBM) for AI accelerators, and DRAM and high-capacity NAND for expanding data centers. This prioritization is leading to a scarcity in other, less profitable memory chips.

Undersupply in Older Memory Technologies

Older memory technologies, specifically NOR flash and single-level cell (SLC) NAND, are now facing severe undersupply. These chips, while less glamorous than HBM, are crucial components in a wide range of everyday electronics. Morgan Stanley forecasts that NOR flash will remain undersupplied until at least 2026, and JPMorgan has also warned about a potential supply crunch in SLC NAND.

Price Increases and Market Impact

The scarcity is driving significant price increases for these essential components. TrendForce reported that contract prices for both NOR flash and SLC NAND increased by over 100% in the first half of 2026. Furthermore, SLC NAND prices are projected to rise an additional 120% to 170% in the second half of the year compared to the first half. This economic phenomenon is due to the small market size of SLC NAND, which disincentivizes new investment in its production.

Critical Role in Everyday Electronics

NOR flash is commonly used for storing boot and program code in automotive, industrial, and networking equipment. SLC NAND is valued for its reliability and endurance in embedded hardware with long lifespans. The undersupply and rising costs of these vital components could impact the production and pricing of a broad array of electronics that rely on them, from routers to industrial control systems.