The surge in demand from the artificial intelligence (AI) market has sparked a substantial need for data storage. Coupled with HDD manufacturers reducing supply due to market conditions last year, the shortage of high-capacity HDDs since the second half of last year has led to overall HDD price spikes. Industry sources cited by TechNews have pointed out that from the third quarter of last year to the first quarter of this year, HDD prices have risen by a cumulative 10%-20%.

According to a previous report from Nikkei News, despite HDD’s competitive advantage in lower cost per storage unit, SSD has been gradually replacing HDD in the mainstream consumer PC market for storage devices below 2TB. This shift is driven by SSDs’ access speeds that surpass HDDs by nearly 10 times, coupled with the recent decline in NAND Flash memory prices, which has narrowed the cost gap between the two technologies.

Previously, TrendForce projected a strong 13–18% increase in Q2 NAND Flash contract prices, with enterprise SSDs expected to rise highest. Despite Kioxia and WDC boosting their production capacity utilization rates from Q1 this year, other suppliers have kept their production strategies conservative. The slight dip in Q2 NAND Flash purchasing—compared to Q1—does not detract from the overall market’s momentum, which continues to be influenced by decreasing supplier inventories and the impact of production cuts.

However, according to industry sources cited by the same report, the global economic downturn in 2023 and the resulting decline in server demand have led to losses even for suppliers of smaller-volume HDDs. Consequently, manufacturers implemented production reduction strategies, reducing capacity by 20% in hopes of stabilizing HDD prices.

Despite this, the burgeoning demand in the AI market since early 2023 has sparked a surge in demand for high-capacity HDD products. As suppliers have not announced plans to increase production capacity, industry sources cited by the report predict that the supply shortage for large-capacity HDD products will persist throughout this quarter and possibly extend for an entire year.

The report further cited sources indicating that HDD prices are expected to continue rising in the second quarter of 2024, with a potential increase of 5% to 10%. Sources also indicate that HDD prices have remained stagnant amid SSD competition. Reportedly, suppliers are unlikely to expand production immediately to sustain the upward price trend of HDDs. Therefore, the timing of HDD price stabilization hinges on developments in the artificial intelligence and high-performance computing markets.

(Photo credit: WDC)

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• [News] Western Digital Customer Letter Confirms HDD Supply Shortage! NAND Flash and Hard Drive Prices Continue to Rise
• [News] SSD Prices Keep Rising

Following the shortage of HBM memory production capacity, the memory market is experiencing another shortage. As the memory market plunged into a downturn in 2021, SSD prices continued to slide for about two years. In response to market changes, memory manufacturers reduced production of NAND Flash. With the effective implementation of production reduction strategies, demand partly increased, leading to a tightening supply of SSD.

Recently, it’s reported that NAND Flash product market has experienced a shortage in enterprise SSD.It’s believed that this is mainly due to the AI boom, coupled with the large-scale construction of data centers by global technology giants, which has significantly increased the demand for memory devices, resulting in a tight supply of SSDs. In this context, major memory manufacturers began to take action.

Amid the SSD Supply Shortage, Suppliers Raise Prices Drastically

1. Samsung Hikes Prices of Enterprise SSD

Over the past two weeks, it’s frequently reported that enterprise SSD faced a shortage, prompting the major memory manufacturer Samsung to consider a price increase of 25% on enterprise SSD.

According to a report from BusinessKorea on April 2nd, Samsung is rumored to implement a price increase of 20-25% on enterprise SSD in 2Q24, aiming to reverse the downward trend experienced since 2023. Initially, Samsung planned to raise prices by around 15% from the previous quarter. However, due to higher-than-expected demand, Samsung has decided to expand the price increase. As Samsung holds approximately half of the market share in enterprise SSD, it will exert a significant influence over pricing decisions.

As per a research by TrendForce on March 7th, Samsung dominated the global enterprise SSD market with a market share of 41.7%, followed by SK Hynix (33.2%), Micron (10.8%), Kioxia (9.4%), and Western Digital (4.9%) in 4Q23.

It is worth mentioning that these five companies are also among the top five NAND Flash memory giants globally. These original manufacturers not only produce NAND Flash memory but also develop controller ICs and manufacture enterprise SSD products.

According to previous study by TrendForce, the controller IC field is mainly divided into two major camps: One contains the aforementioned memory manufacturers, who generally do not sell controller ICs externally, although Micron’s controller ICs are used both in their own products and sold to other manufacturers; the other refers to IC design companies, represented by companies such as Marvell, SIMO, and Phison.

As a pioneer in controller ICs field, Marvell occupies the high-end market for a long time, supporting the use of high-performance and large-capacity SSD in enterprise and large-scale data center environments. SIMO and Phison gain their foothold in the enterprise SSD market on the strength of cost-effectiveness advantages.

On the supply side, Wallace C. Kou, GM of SIMO, previously stated that prices for NAND Flash in 2Q24 have already been negotiated, with a 20% increase expected. He indicated that some suppliers began to rear profit in 1Q24 and more are expected to rake in money in 2Q24.

According to TrendForce, apart from Kioxia and Western Digital, which have increased their capacity utilization rates since 1Q24, other suppliers have generally maintained a low production strategy. Although NAND Flash purchases in 2Q24 have slightly decreased relative to 1Q24, the overall market situation continues to be affected by reduced inventories and production cuts. The contract price of NAND Flash in 2Q24 is estimated to rise strongly by about 13-18%.

Benefited from the increase in demand from cloud service provider (CSP) in North America and China, it is expected that the procurement volume of enterprise SSD will grow quarter by quarter in 1H24. Due to the low Order Fill Rate (OFR) for high-capacity SSD orders, suppliers still dominate the price trend, and buyers is forced to accept the increased possibility of supplier prices.

Meanwhile, some buyers still attempt to increase their inventory levels before the peak season in 2H24. Therefore, it is estimated that the contract price of enterprise SSD in 2Q24 will increase by 20-25%, marking the highest increase across all product lines.

2. Consumer SSD Prices Continue to Increase

At the meantime, there’s news in the consumer SSD market. On a wholesale prices basis, a report from Nikkei on April 2 said that the wholesale price (Bulk transaction price) of benchmark SSD products, TLC 256GB, was around USD 28.5 per unit from January to March, an increase of 12% compared to the previous quarter (October to December 2023).

The price of larger-capacity SSD (512GB) was around USD 53.5 per unit, a 10% increase from the previous quarter. Prices have seen consecutive increases for two quarters, implying an expansion of the growth rate compared to the 9% increase in the previous quarter. SSD wholesale prices are set once every season between memory manufacturers and buyers.

Most buyers show willingness to accept the price hike requests from the memory manufacturers for their sake of profit. According to Nikkei, citing a procurement manager from a certain PC manufacturer, the price increase is understandable given that various memory manufacturers are facing losses.

With an increase in market demand and the production reduction strategies of NAND Flash memory manufacturers since 2Q23, SSD prices begun to climb, experiencing significant increases in a relatively short period.

Regarding the upward trend in SSD prices, Phison Electronics’ Pua, Khein-Seng issued a warning in mid-March, stating that further increases in SSD prices could cause a decrease in demand. NAND Flash memory manufacturers should strive to increase production to meet market demand, rather than pare back production to achieve higher demand than supply.

Phison believes that as essential components for fabricating PCs, if memory device prices become too high, it may disrupt the progress of the PC market recovery in the context of a sluggish global economy, which may lead to a shrinkage in demand once again, and ultimately hinder the development of the NAND Flash memory industry.

Industry Urges Supply to Match SSD Demand

With global tech giants like NVIDIA and Tesla accelerating their expansion in artificial intelligence, market demand for storage devices has surged significantly. Major server companies like Dell Technologies and Hewlett Packard Enterprise (HPE) are competing to purchase SSD. Industry sources indicate that server operators, in order to expand memory capacity, have recently placed urgent orders, and some products are even facing shortages, prompting the manufacturers to consider expanding production.

Considering memory manufacturers’ moves, according to a report from “THE ELEC” in mid-March, Samsung Electronics’ NAND Flash factory in Xi’an, China, has resumed operations at a rate of around 70%. In 2H23, Samsung reduced the plant’s operating rate to 20-30%, marking the lowest point since the decline in memory prices and demand began in late 2022.

NAND Flash leading company Kioxia plans to adjust the production cutbacks strategy started in 2022 and increase output. Kioxia expects the utilization rate of its NAND factories to recover to around 90% by March 2024, depending on demand.

On March 27, Micron announced the groundbreaking of its new packaging and testing plant in Xi’an. The new plant is expected to start production in 2H25, and will gradually go into production in response to market demand.

According to TrendForce’s research on March 19th, against the backdrop of an ongoing increase in NAND Flash price lasting to 2Q24, some suppliers will struggle to reduce losses, lower costs, and return to profitability this year. Starting in March, Kioxia/Western Digital was the first to restore capacity utilization to nearly 90%, while other industry players have not significantly increased production scale.

TrendForce also mentioned that to meet the demand during busy season in 2H24, coupled with Kioxia/Western Digital’s low inventory levels, production expansion this time will mainly focus on 112-layer and some 2D products, which are expected to bear fruit this year and further drive the growth rate of NAND Flash industry supply bit to 10.9% in 2024.

In terms of process, as NAND Flash prices reverse in 2024, supplier inventory levels are gradually decreasing. To maintain long-term cost competitiveness, suppliers embarked on upgrading their processes. Samsung and Micron are the most active. It is estimated that the two companies’ output of processes above 200 layers will account for over 40% by 4Q24.

Kioxia and Western Digital’s production focus in 2024 remains on the 112-layer technology. With support from the Japanese government subsidies, equipment installation for 218-layer technology is expected to begin in 2H24, with more optimistic projections for 218-layer output in 2025.

In light of Kioxia’s current process development plan, products beyond 218 layers will directly advance to processes above 300 layers in hopes of accomplishing better cost structure and regaining a top position in both technology and cost aspects.

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• [News] Low-Price SSDs Disappearing? Three Major Manufacturers Rumored to Increase Prices by 50%

(Photo credit: Samsung)

The U.S. government officially announced today that it will provide a USD 6.6 billion subsidy to TSMC, and in its latest press release, confirmed that TSMC will build its third fab in Arizona, USA, with total investment rising to USD 65 billion.

Due to various construction and chip incentive factors, TSMC announced in 2023 that the commissioning of Fab 21 (Fab 1) in Arizona, originally planned for 2024, was postponed to 2025. In January 2024, it was further announced that Fab 2 (originally scheduled to commence operations in 2026) would not begin mass production until 2027 or 2028.

According to the latest information released by TSMC, Arizona’s first fab is on track to begin production leveraging 4nm technology in first half of 2025. The second fab will produce the world’s most advanced 2nm process technology with next-generation nanosheet transistors in addition to the previously announced 3nm technology, with production beginning in 2028.

The third fab will produce chips using 2nm or more advanced processes, with production beginning by the end of the decade. Each of the three fabs, like all of TSMC’s advanced fabs, will have cleanroom area approximately double the size of an industry standard logic fab.

TSMC’s confirmation of plans to build a third fab in Arizona signifies its move towards more advanced semiconductor production in the United States. However, based on the current construction progress in the U.S., market estimates suggest that mass production may not begin until after 2030.

“The CHIPS and Science Act provides TSMC the opportunity to make this unprecedented investment and to offer our foundry service of the most advanced manufacturing technologies in the United States,” said TSMC Chairman Dr. Mark Liu.

“Our U.S. operations allow us to better support our U.S. customers, which include several of the world’s leading technology companies. Our U.S. operations will also expand our capability to trailblaze future advancements in semiconductor technology.”

“We are honored to support our customers who have been pioneers in mobile, artificial intelligence and high-performance computing, whether in chip design, hardware systems or software, algorithms, and large language models,” said TSMC CEO Dr. C.C. Wei.

“They are the innovators driving demand for the most advanced silicon that TSMC can provide. As their foundry partner, we will help them unleash their innovations by increasing capacity for leading-edge technology through TSMC Arizona. We are thrilled by the progress of our Arizona site to date and are committed to its long-term success.”

This market news emerged shortly after the major earthquake in Hualien, Taiwan, leading to speculation within the industry about its connection to the earthquake. Nevertheless, according to industry sources, the recent news about the Fab 3 project in Arizona was not triggered by the recent earthquake but was actually finalized by TSMC after discussions with the U.S. government on future plans.

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• [News] TSMC’s Latest Statement Indicates Equipment Largely Recovered, Revenue Forecast Unchanged
• [News] TSMC’s US Fab Reportedly Eyeing for Early Mass Production

(Photo credit: TSMC)

Currently, the global foldable phone market is dominated by non-Apple players, with Samsung and Huawei acting as the key players, continuously expanding their related product lines. Although Apple has yet to debut any foldable hardware, rumors cited by a report from Economic Daily News suggest they are actively working to catch up by accelerating product development.

Sources cited by the same report suggest that Apple is highly likely to launch its first foldable hardware product either this year or next year, potentially signaling a shift to a three-way competition in the foldable phone market.

Currently, Samsung and Huawei collectively hold over 80% of the global foldable phone market share, making them highly influential in the market. Industry sources cited by the report believe that with Apple entering the foldable phone market, a reshuffle is inevitable, offering consumers not only more product choices but also potentially lower prices compared to the current landscape.

It is reported that in the past, most foldable phones were priced starting at USD 1,000, with some flagship models even priced at USD 1,500. With Samsung and Huawei potentially introducing more affordable foldable phones this year, it is expected that foldable phones priced below USD 1,000 will become increasingly common in the future.

Industry sources cited by the same report point out that the battleground for mobile phone brands will still be in flagship models, as the specifications and features of flagship phones determine the technological prowess of the brand. Therefore, whether it’s Samsung, Huawei, or even Apple, they will all compete vigorously in this market.

The market for budget-friendly phones is currently not well-defined and is primarily in the early stages of development, focused on testing the waters. It is estimated that it will take another two to three years for this market segment to become more stable.

Same sources cited by the report suggest that with Samsung and Huawei continuously investing in the foldable phone market, Apple is pressured to launch a foldable phone to keep up and not fall behind. However, the biggest challenge lies in how Apple can launch a foldable phone later but still seize the initiative, potentially attracting loyal Apple fans without affecting the sales of existing iPhone models.

According to the analysis released by TrendForce in the second half of last year, Apple’s development in the folding field still requires time. Apple’s foray into foldables has been tepid, to say the least.

Yet, Apple’s unwavering obsession with user experience could be the culprit. Furthermore, persistent challenges with foldable tech—think panel evenness and hinge design—might be holding them back.

But here’s the kicker: Achieving perfection with larger foldable panels is somewhat simpler than their smaller counterparts. Could this mean Apple might leapfrog right into medium-sized foldable products—like laptops or tablets? Only time will tell.

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• [News] Is a Foldable iPhone on the Horizon? Samsung Display’s ‘Apple Team’ Strengthening Spurs Speculation

(Photo credit: Apple)

As TSMC’s earnings call approaches on April 18th, according to a source cited in a report from Commercial Times, it has predicted a downturn in the smartphone industry as it enters a slow season. However, TSMC is reportedly benefiting from AI demand, bolstering its operations through HPC (High-Performance Computing). Additionally, the increasing revenue share from the 3nm process is expected to contribute positively to performance in the second quarter.

TSMC has issued updates for three consecutive days, indicating that the overall recovery rate of its fabs has exceeded 80%. They reiterated their annual performance outlook from January’s earnings call, forecasting revenue growth in the low-to-mid twenties percentage range for the full year. Notably, in the fourth quarter of last year, the revenue share from high-performance computing matched that of smartphones, both reaching 43%, serving as dual engines for operational growth.

The same report, citing sources, indicates that TSMC’s advanced process technology and yield rates lead the industry, making it the primary foundry choice for most global customers.

Based on overall market share, TrendForce’s latest report reveals that in 2023, global foundry revenues hit US$117.47 billion, with TSMC capturing a dominant 60% share. This figure is expected to climb to around $131.65 billion in 2024, increasing TSMC’s share to 62%. It is also estimated in the report from Commercial Times that TSMC holds a market share of approximately 70-80% in 5nm technology, and this is expected to exceed 90% for 3nm, covering nearly all major players in the market.

TSMC has also emphasized that besides traditional smartphone applications, High-Performance Computing (HPC) is becoming an increasingly important application for their advanced processes. This means that even during the second quarter when demand for smartphone chips is typically lower, it will be supported by HPC demand.

The current major AI accelerators such as NVIDIA’s A100 and H100 GPUs, AMD’s Instinct MI250 and MI300, are all manufactured utilizing TSMC’s 7nm or 5nm nodes, highlighting TSMC’s critical position in the AI industry. Reportedly, as demand for AI-based Generative AI (AIGC) continues to rise, TSMC’s production volume is also expected to increase accordingly.

According to the same report citing sources, TSMC’s utilization rate for its 3nm production remains high and unaffected despite the impact of the recent earthquake on its facilities. TSMC has emphasized that key machines used for advanced processes, including all Extreme Ultraviolet (EUV), were undamaged.

However, in areas where the shaking was more severe, certain production lines are expected to require longer adjustments and calibration to restore automated production. TSMC is conducting a comprehensive review of the impact of this earthquake while maintaining close communication with its customers.

Furthermore, TSMC’s biggest challenge at the moment is how to catch up with customer expansion demands.

The most lacking capacity currently is in CoWoS production. Although TSMC maintains its stance of doubling capacity compared to 2023, market estimates cited in the report indicate that TSMC’s capacity is expected to increase from around 13,000 wafers to 30,000-35,000 wafers. This aligns with what founder Morris Chang described—AI chip demand in the future will no longer be in the tens or hundreds of thousands of wafers but will require the capacity of 3, 5, or even 10 fabs.

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• [News] TSMC’s Latest Statement Indicates Equipment Largely Recovered, Revenue Forecast Unchanged
• [News] Taiwan Hit by 7.2 Magnitude Earthquake: TSMC and Other Semiconductor, Panel Supply Chain Updates

(Photo credit: TSMC)