Guosheng Securities Inc. has released a research report outlining key opportunities in the SLC NAND market. On the supply side, the report notes that global NAND manufacturers have been focusing their R&D investments and capital expenditures on advancing high-layer-count 3D NAND technology. This strategic shift is creating a significant opportunity for domestic substitution in the SLC NAND segment.

On the demand side, the architecture where GPUs directly control SSDs imposes extreme technical requirements on storage, particularly for AI SSDs. This necessitates the use of pSLC and pMLC flash architecture solutions. Furthermore, insufficient supply of eMMC products is opening up additional substitution space for SLC NAND. The report advises investors to focus on the potential for SLC NAND value reassessment in the AI era. The main viewpoints from Guosheng Securities are detailed below.

SLC NAND's Superior Performance and Substitution Space from Major Players' Exit

SLC NAND (Single-Level Cell NAND) is a NAND Flash technology where each memory cell stores only 1 bit of data (0 or 1), utilizing two states (erased/programmed) for data storage. Compared to multi-bit storage solutions like MLC, TLC, and QLC, which also fall under the NAND Flash category, SLC NAND typically offers superior performance in terms of erase/write endurance, write latency, and operational stability.

In terms of market size, SLC NAND represents a niche segment within the broader NAND Flash market. The global NAND market is estimated at approximately $65.6 billion in 2024, with the SLC NAND segment accounting for $2.32 billion. The competitive landscape is highly concentrated among overseas and Taiwanese manufacturers. As of 2025, the major players are Micron (21%), Kioxia (20%), Winbond (15%), SkyHigh (14%), Macronix (11%), GigaDevice (9%), and Dosilicon (6%).

With global NAND manufacturers prioritizing the evolution towards high-layer-count 3D NAND, opportunities for domestic substitution in SLC NAND are emerging. For instance, a March 2026 report indicated that Kioxia had notified customers of the discontinuation of TSOP-packaged products, citing reasons including substrate phase-out, changing market demand, and production constraints.

AI Drives Value Reassessment of 2D NAND, Demand Expected to Grow Rapidly

NVIDIA and Amazon are jointly advancing the development of GIDS (GPU-Initiated Direct Storage) technology, which is slated for implementation in their next-generation Vera Rubin AI platform. AI workloads impose extreme technical demands on SSDs, which become even more pronounced under a GPU-direct-control architecture. These new requirements for AI SSDs include upgraded performance needs, higher endurance demands, constraints related to heat dissipation and power consumption, multi-initiator data consistency and isolation, and balancing capacity with cost.

Additionally, it is noteworthy that in AI inference scenarios, operations like KV caching exhibit access patterns characterized by high frequency and small-grain overwrites. This significantly increases the Daily Full Disk Writes (DWPD) of SSDs. To meet these stringent endurance requirements, storage manufacturers typically opt for pSLC or pMLC flash architecture solutions, or substantially increase the Over-Provisioning (OP) ratio within the drive to alleviate write pressure. Consequently, the value of SLC & MLC NAND is expected to be reassessed in the AI era, with demand poised for high-speed growth.

The future data center will involve different storage tiers performing distinct roles. In scenarios involving large model inference, long context, KV Cache, RAG, and vector search, the value of low-latency Storage-Class Memory (SCM) technologies like XL-FLASH will be further amplified. Kioxia's second-generation XL-FLASH offers 128Gb SLC and 256Gb MLC chip specifications, precisely matching current data center and enterprise SCM storage needs with advantages in low latency, high endurance, and easy scalability.

In this future architecture, DRAM will continue its role as ultra-low-latency main memory, while HBM will serve high-bandwidth access on the GPU side. TLC and QLC NAND will continue to handle high-capacity storage and cost-sensitive data loads. SCM technologies like XL-FLASH will fill a new tier between DRAM/HBM and traditional NAND, offering low latency, non-volatility, and more scalable capacity.

Data access patterns within AI systems are becoming increasingly complex. Particularly in large model inference, long context, KV Cache, RAG (Retrieval-Augmented Generation), and vector search scenarios, frequent, small, random access requests are becoming more common. While traditional SSDs excel at large, sequential reads and writes, many access requests in AI inference are more fragmented, frequent, and closer to real-time paths, further amplifying the value of low-latency SCM technologies like XL-FLASH.

TrendForce Forecasts 70%-75% Upside Potential for SLC NAND Prices in H2 2026

According to TrendForce, SLC NAND serves as the core storage solution for various high-reliability scenarios due to its core advantages: high erase/write endurance, extremely low bit error rates, long-term data retention, and wide-temperature operation. Current downstream demand is steadily expanding. The deployment of edge AI inference modules in smart factories, industrial robots, and high-end networking equipment is driving increased demand for high-reliability storage. Concurrently, enterprise servers and data centers commonly use SLC NAND for system boot drives and high-frequency read/write caching. Its role is nearly irreplaceable in sectors like medical, military, and aerospace, which have near-zero tolerance for data errors.

On the supply side, leading overseas memory manufacturers continue to reduce capacity for small-capacity, mature-process SLC products. Industrial control, automotive-grade, and networking communication customers are simultaneously increasing safety stockpiling. A concentrated inventory replenishment in the market during Q2 is driving prices upward. The cumulative price increase in the industry's average selling price is expected to reach 130%-150% in the first half of 2026. TrendForce predicts that prices in the second half of 2026 still have 70%-75% upside potential. The supply-demand gap is expected to be larger for industrial and automotive-grade SLC products, potentially leading to even more pronounced price increases.

Winbond & Macronix: Guidance Suggests Supply-Demand Imbalance to Persist Beyond 2028

1) Winbond Electronics: Winbond reported Q1 2026 revenue of NT$38.253 billion, representing a sequential increase of 43.7% and a year-on-year surge of 91.3%. Gross margin soared to 53.4%, up 11 percentage points sequentially and 27 percentage points year-on-year. Net profit after tax reached NT$10.118 billion, skyrocketing 226.9% sequentially and turning profitable year-on-year. Net profit attributable to owners of the parent was NT$10.114 billion, surging 195.5% sequentially and also turning profitable year-on-year. Earnings per share were NT$2.25.

Regarding its Flash memory business, Winbond's Q1 revenue increased 23% sequentially and surged 89% year-on-year. The Average Selling Price (ASP) rose approximately 34% to 36% sequentially, with a year-on-year increase in the mid-60% range. Winbond pointed out that major overseas memory manufacturers have completely exited the 2D SLC and MLC NAND segment, creating a structural supply gap in the industry. Downstream customers are generally facing pressure from material shortages and solution redesigns. Some manufacturers, due to insufficient eMMC supply, are completing product iterations by compressing system programs and switching to Winbond's 8Gbit SLC NAND.

The company is precisely capturing the industry's supply-demand benefits, accelerating the commissioning of new equipment. It expects the bit shipment volume for SLC NAND to increase by over 80% in the coming year. The profitability level of this product line is superior to that of NOR Flash and is expected to continuously improve the company's overall profit structure. Currently, Winbond's existing and new capacity for 2026 and 2027 has been fully booked by customers. The tight supply situation for various products, including DDR3, DDR4, and Flash, is expected to continue, with the industry's structural supply-demand imbalance projected to persist beyond 2028.

2) Macronix: Macronix reported Q1 2026 net revenue of NT$10.5 billion, achieving significant growth both sequentially from Q4 2025 and year-on-year from Q1 2025. Alongside rising product prices, the company's profitability saw significant recovery. Operating gross margin was 40.8%, and operating net margin rebounded to 18.5%, marking an end to operational losses from the previous two consecutive quarters.

Specifically, NAND business revenue surged 90% sequentially and soared 382% year-on-year, with its contribution to total revenue rising to 30%. Within this, the tight supply-demand situation for eMMC led to orders exceeding supply, with eMMC revenue in Q1 2026 increasing 94% sequentially and a remarkable 3993% year-on-year. Revenue from other NAND products increased 88% sequentially and 219% year-on-year for the quarter. The company plans to continue expanding capacity to meet the surging order demand from downstream customers.

Risk Factors to Consider

Key risks include downstream demand falling short of expectations, slower-than-anticipated R&D progress, and geopolitical risks.