(Yicai) March 11 -- SanDisk, the world’s leading maker of memory chips, said it plans to increase not-and flash memory prices by more than 10 percent next month in anticipation of a supply shortage.

SanDisk will hike its NAND prices from April 1, the California-based firm announced recently.

Due to a NAND supply surplus since last year that has dampened demand and depressed prices, their top five original equipment manufacturers -- Samsung, Kioxia, Micron, SK Hynix, and SanDisk’s parent company Western Digital, which together account for over 80 percent of the global NAND market -- began cutting production.

SanDisk’s decision to raise prices signals that these cuts may be starting to have an effect on demand, though it remains to be seen whether clients will accept the new pricing.

If the OEMs jack up prices, customers and distributors may prioritize shifting cheaper products from their inventories first, a technology, media, and telecoms analyst told Yicai. Ultimately, it depends on end-user demand, he noted.

So far this year, the recovery in demand for personal computers and smartphones has been weak, partly because of the consumer replacement cycle and partly due to the absence of breakthroughs in the use of artificial intelligence features in gadgets, which is weighing on the consumer storage market, the analyst said.

Reduced production at the OEMs, shrinking phone inventories, and the rise of AI will boost demand for NAND flash memory, thereby alleviating the oversupply issue, with prices expected to recover in the second half of the year, according to market research firm TrendForce.

But the outlook for the consumer electronics market is still uncertain, the head of a listed electronics chip company pointed out. If the market for AI-enabled PCs, glasses, and headsets truly takes off, the demand for memory chips will surge, he added.

Editor: Futura Costaglione