Chipmakers headed into glut territory, research shows. But this may not be the whole picture

TrendForce has become the first major research house to call the end of the current memory upcycle for NAND flash, the non-volatile storage chips that retain data without power and sit inside phones, laptops, memory cards and the solid-state drives used across data centres. The Taiwanese firm expects supply to exceed demand in the second half of 2027, pushing average selling prices back into contraction after nearly two years of steep increases. The argument runs that continued declines in handset and personal computer demand next year will offset growing data centre orders, tipping the market into a bit surplus. That surplus, in this telling, arrives even though the only significant increase in wafer output comes from China, mirroring the pattern already visible in 2026. There is reason to think the forecast is too cautious. The 2026 parallel The conditions TrendForce anticipates for 2027 look strikingly similar to those that actually played out in 2026. Last year also saw falling PC and handset sales, rising Chinese output, and significant constraints tied to surging data centre requirements. Yet 2026 did not produce a glut. Demand from cloud providers absorbed the available capacity, with next year's NAND allocations reportedly sold out and big technology firms already negotiating 2027 supply in advance. If the same forces held the market tight through 2026, it is not obvious why a near-identical setup flips into oversupply a year later. The demand TrendForce is missing Two additional sources of demand strengthen the case that the firm is underestimating the data centre pull. The first is the growing storage burden created by AI inference.