Phison Starts a Venture Arm to Back Startups Building on Its AI Platform

For more than two decades Phison has been the company inside other companies' products, the controller maker found in more than one in every five SSDs shipped worldwide. Now it wants a seat on startups' cap tables as well. On July 28, Phison's board approved NT$600 million, about US$20 million, for a wholly owned investment company whose job is to back startups for the Phison group. Eleven weeks later, on the TechCrunch Disrupt stage in San Francisco, Phison's Michelle Chan told founders the company is expanding that venture arm and wants to build products with them. The question in Silicon Valley is what exactly a flash memory company is shopping for.

A storage company sets up its own venture arm

The board voted on July 28 to commit NT$600 million to 60 million shares, at NT$10 apiece, of a new subsidiary in Taiwan, wholly owned by Phison and paid for with its own funds. The entity's provisional Chinese name, 群聯資本, translates to Phison Capital, and the filing makes clear it is the group's vehicle for investing in startups.

CEO K.S. Pua gave analysts more context on Phison's second quarter earnings call on August 13. He said the board had approved a corporate venture capital arm two weeks earlier and put a figure on the opening outlay. "The first investment is $20 million," he said. The aim, he explained, is to back startups working as independent software vendors, or ISVs, that write applications for Phison's aiDAPTIV technology and its new AI Data Platform. Phison posts its call materials on its investor relations site.

Twenty million dollars is not much for a business with billions in annual revenue, but it is a beginning. The point is the signal: Phison now has a dedicated vehicle, and a budget, to own pieces of the companies it wants in its ecosystem.

From factory partners to software founders

Phison is no stranger to strategic bets, though in the past they looked like the company itself: hardware, manufacturing and supply. In December 2024 it formed MiPhi with Micromax, a joint venture to design and build NAND storage products in India, and Pua still counted MiPhi among Phison's partnerships on the August call. The firm's closest ties are with the NAND makers whose chips its controllers manage and the PC and server brands that put its drives to work; Pua named MSI, ASUS, Advantech and ASRock in that group, along with Intel and MediaTek as platform partners.

The new venture arm has other aims. Rather than factories and module houses, it is set up to put money behind the software side, backing small teams that turn Phison's memory technology into something a hospital, a bank or a small manufacturer can actually use. That is the wider investment objective. Phison no longer invests only to secure supply or open a market. It is investing to create demand for its own platform.

The products in question are the ones Phison has been pushing all year. Pascari aiDAPTIV combines middleware with purpose built flash drives so a workstation or AI PC can handle larger AI models than its graphics memory would allow. The AI Data Platform is a local AI system in a box, with the hardware, orchestration and software modules in one. We examined how companies put that stack to work in our look at closing the AI gap.

What Michelle Chan told founders at TechCrunch Disrupt

On October 13, Michelle Chan brought Phison's pitch to Silicon Valley. Chan, who builds the company's ISV, systems integrator and OEM partnerships in North America, took the Breakout Stage at Moscone West in the session "Taiwan Powering the Next AI Revolution: Connect, Invest & Scale" and set out the problem first. "The biggest challenge in AI is no longer building the model," she said. Many companies tinker with AI; far fewer have it underpinning their core operations.

Chan then drew on an analogy founders know well. Graphics processors were once limited to graphics until NVIDIA's CUDA software put them to work on general computing and all manner of applications. Phison wants aiDAPTIV to have a similar effect on NAND flash, making storage a working part of AI systems. Such a platform only has value if developers build on it, hence the venture arm.

Chan said Phison is growing its corporate venture capital arm and invited startups to join the company in joint development and strategic investment. Founders can also put their products on display at Phison's Silicon Valley AI Demo Site and meet prospective customers there. She did not share fund sizes or portfolio names. The session closed on a line that sums up the offer: "Silicon Valley invents. Taiwan builds."

Five days later, Michael Wu, president and general manager of Phison US, put Chan's remarks in writing for his LinkedIn followers. We are featuring his post here in full because it makes the business case in his own words.

Why a chip supplier wants a portfolio of startups

Wu's post opens with the gap that justifies the whole strategy. "Everyone wants AI in their business. But getting AI to actually do the work? That's a different story," he wrote, citing Chan's figures that 76 percent of businesses use AI while only 14 percent have fully integrated it into their core operations. "Jokes aside, the next phase of enterprise AI isn't about who adopts it first, but who can turn it into real business value."

Real business value is found in an application, not a chip. A clinic wants its own tool on its own server for summarizing patient notes; a bank wants document review that never leaves the building. Phison can put the box and the memory in place, but it needs software firms to supply the use case. Holding a stake in those companies gives Phison an incentive to see them do well and an early view of what customers actually buy.

Then there is the commercial clock. Pua told analysts in August that Phison intends to be a total solutions provider for on premises AI at small and midsize businesses, even though revenue from the AI Data Platform is still small. He said he hopes it becomes significant between the fourth quarter of 2026 and the second quarter of 2027, and every ISV shipping on aiDAPTIV in that window helps. The platform is already at work inside Phison: Chan said more than 72 percent of its staff use AI every day, saving some 8,400 hours a week, and that it has been deployed in more than 30 hospitals, 10 banks and about a dozen large enterprises.

How a founder gets in the door

For a startup, the product comes before the pitch deck. Software teams building an AI application can use the "Discuss an integration" option on Phison's inference page to put aiDAPTIV into the design from the outset. That is the kind of company Pua has in mind for the venture arm.

Hardware startups have another way in. Phison's IMAGIN+ design services handle custom flash controllers, firmware tuning, validation testing and shared R&D labs, with no set minimum order quantity or engineering fee. For a young company with a robot or an edge AI box in the works, joint development with a supplier of Phison's size may be as valuable as the check.

Corporations that want to bring Phison's technology into their own products can start with Wu, who heads the U.S. operation, while Chan's North American team works with software vendors, systems integrators and OEMs. Phison has offices in San Jose and Colorado, and Pua said on the August call that a Vancouver office aimed at North American business customers is in the works. The Silicon Valley AI Demo Site is where those relationships get put in front of buyers.

Will strategic money from a chip supplier help AI startups or tie them down?

If the plan holds, the next two years could bring a handful of startups whose products run best on Phison hardware: local assistants in clinics, private document tools for law firms and banks, AI agents on the factory floor. To a Silicon Valley founder, a strategic investor is not the same as a financial check; one that can also put firmware engineers, OEM ties and a demo room at a team's disposal is especially valuable when hardware has to be in customers' hands before a Series A. For Phison, a roster of ISVs could turn the AI Data Platform into the kind of business Pua is counting on by mid 2027, and it gives a Taiwan supplier a direct line to Bay Area startups that usually see Taiwan only as a factory.

Then there are the familiar worries of any corporate venture arm. Strategic capital can come with conditions, such as exclusivity, preferred platforms or information rights, that put off rival suppliers and future investors. A US$20 million opening commitment is modest next to the venture arms of bigger chip companies, so founders would do well to ask what follow on money exists before counting on it. Corporate venture budgets have a way of contracting when the parent's core market does, and NAND flash is a notoriously cyclical business. And since Phison's performance figures for aiDAPTIV come from its own testing, a startup betting on it will want to run independent benchmarks of its own.

Whether corporate venture capital serves a young company or steers it is a long running debate. Supporters say a strategic investor can give a startup the technical depth, distribution and customers a financial firm cannot, and that a company building on a platform is better off with the platform maker on its side. Critics counter that a corporate investor answers to its parent's product roadmap, which can change quickly, and that a startup too close to a single supplier risks its independence. Both sides agree it comes down to the terms and how much freedom the startup keeps.

Signals to watch: the first names Phison's venture arm puts forward, and whether they are software companies as Pua described or the Physical AI hardware teams courted on stage; any growth in the NT$600 million commitment; the companies that turn up at the Silicon Valley AI Demo Site; and whether revenue from the AI Data Platform starts to show in Phison's results between late 2026 and mid 2027.

Sparknify coordinated the TechCrunch Disrupt session where Chan spoke, and our report on Taiwan's moment on the Disrupt stage covers the ITRI speakers and Taiwanese startups who shared it with Phison.

Phison spent more than two decades helping other companies store their data, and it is now betting that the next wave of AI companies will be built on its memory.

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