KS Pua, CEO of Phison Electronics, recently took the initiative to resign from his positions as the company's chairman. Riding on the success of its partnership with AMD to develop new PCIe Gen4 products, Pua believes 2020 to 2025 is the second growth period for Phison and hopes the company will reach its annual revenue target of NT$100 billion (US$3.6 billion) ahead of schedule. DIGITIMES recently sat down for an exclusive interview with Pua.

Q: The global pandemic has resulted in many changes. How do you view the impact of the industry supply chain shortage and demand from remote work and learning?

A: The impact of the COVID-19 new variant is tough to predict. If it is not eliminated it could cause more lockdowns or create more shortages. However, society's reliance on the Internet continues to rise, resulting in unrelenting increases in storage demands. Storage devices have a service life, which means datacenters need to be updated and upgraded every one to two years. Recently, video-conferencing has also started requesting recordings, expanding the demand for storage capacity. The remote work and learning demand will also continue to grow in 2022. All of these things are good for the storage industry.

Q: NAND prices have been weak recently. How do you see the NAND sector in 2022?

A: Currently, the NAND sector is worried about how expanding production will cause oversupply, but building new factories takes time. There is also a wait to bring in new equipment. The investment amount for 3D NAND processing equipment also continues to climb. Companies must prepare large amounts of cash for investment, but the speed of return on investment continues to slow. As a result, the overall NAND output is not increasing as quickly as expected.

Previously, the cost of NAND dropped by around 45% annually. Based on this, as long as the price remains low for six months the market would experience a shortage. For example, if the price of 128GB were to get closer to 64GB, mobile phone brands would not lower prices. Instead, they would directly upgrade and increase storage capacity, adopting a model of capacity increase without decreasing price. As a result, the demand for flash memory increases every year, and 3D NAND continues to increase along with the number of stacked layers. Additionally, quality and service life have become unstable, which has made the role of controlling chips more important.

The NAND price drop in the second half of the year is a very reasonable development because pull-in times for system makers fall during April-May. Then from September-October, they work with brand customers on mass shipments, and pull-in momentum is suspended in November. Demand is restarted again the following March-April, demonstrating the peak and off-season cycle of the industry.

Phison works in reverse, increasing purchasing during the off-season. Then when June comes around Phison gives supply priority to system makers.

Q: In December 2021, Phison will celebrate 17 years on the OTC exchange. Its market value has grown 33-fold. What are Phison's mid-to-long terms goals?

A: In our first 10 years, Phison had the opportunity to initiate external NAND storage applications. Revenue within those 10 years reached NT$30 billion. From 2010-2015, NAND entered mobile phone and system applications. At that time it was difficult to get into the supply chain. The price of external storage applications was falling 50% each year. Shipments were doubling but revenue was not growing. The best option was to actively increase R&D. The biggest transformation came in 2018 when we partnered with AMD on PCIe Gen4. Doing so proved Phison's R&D capabilities to system makers.

I believe Phison's growth is split into two phases. The first phase was our first 10 years. We will enter the second phase between 2020-2025. Phison will cover controllers, modules to other application products. By the end of 2022, Phison will enter into enterprise-level SSDs. We will also have the ability to independently complete the supply of all storage products, becoming the only all-around supplier of this level in the industry. We believe it is possible to reach a revenue scale of NT$100 billion by 2025, even with the possibility of reaching this goal ahead of schedule.

Q: Recently, many companies have been emphasizing ESG (environmental, social and governance) and green manufacturing. What are Phison's plans and goals for this? What is the long-term governance plan?

A: Although Phison is not a manufacturing plant, we have spared no effort in promoting ESG and the green supply chain. We recently signed a 10-year green energy transfer contract with Foxwell Power, a subsidiary of Shinfox Energy. The goal is to use 20% green energy by 2030 and 100% by 2050.

In order to meet our 2030 target, Phison has increased costs by NT$40 million, but saving energy and reducing carbon emissions is the right thing to do. In the past, the storage industry used high energy-consuming HDDs. Switching to SDDs has power-saving benefits.