Three SSD makers buy into Nanya to secure DRAM supply

Sandisk, Kioxia, and Solidigm are investing in niche memory supplier Nanya in a bid to secure DRAM supplies against a backdrop of severe shortages.

The three, together with Cisco, are investing about $2.5 billion, with Sandisk putting in $1 billion and $500 million coming from each of the others, according to Reuters and Trendforce. Sandisk filed an 8-K form with the SEC detailing a private placement arrangement with Nanya Technology Corporation, saying “the Company agreed to purchase approximately 139 million shares of Nanya common stock for an aggregate purchase price of approximately $1.0 billion, representing approximately 3.9% of Nanya’s outstanding common stock.”

The filing adds: “Concurrently with the Equity Investment Agreement, the Company and Nanya also entered into a multi-year strategic supply arrangement pursuant to which Nanya will supply the Company with DRAM products. The supply arrangement is intended to support the Company’s long-term DRAM sourcing strategy.”

Nanya states: "The proceeds will be used to invest in NTC's factory facilities and production equipment for advanced memory manufacturing to address the surge in computational demand driven by next-generation AI."

Nanya has a circa 2 percent share of the global DRAM market. Samsung has 33 percent, SK Hynix 34 percent, Micron 26 percent and China’s CXMT 5 percent. The three market leaders are using much of their DRAM chip output to make high-priced and highly-profitable high-bandwidth memory (HBM) for GPU servers, restricting the supply of DRAM for use in x86 servers, networking gear, PCs, SSDs and smartphones. 

As Nanya is not present in the HBM market, all of its chips go to traditional DRAM buyers. The three SSD makers, along with Cisco, are securing their DRAM supply lines from Nanya by these private placement deals. It’s noteworthy that Solidigm is participating, as its parent, SK Hynix, is a DRAM and HBM maker and, presumably, cannot or will not guarantee DRAM supply to its subsidiary. 

Our understanding is that Samsung, SK Hynix and Micron SSDs use in house DRAM.

Nanya will use its cash freshly established cash pile to help pay for new DRAM manufacturing facilities and production equipment. It’s currently setting up a new DRAM fab in Taiwan’s Nanling Technology Park. Construction started in 2022 and equipment installation scheduled to start in early 2027, with production output starting later that year or early 2028, ramping up to an estimated 45,000 12-inch wafers/month.