According to the reports from EETimes China and Blocks &Files, Western Digital (WD) is said to be considering spinning off its NAND and SSD business, which could be valued similarly to Solidigm.

Reportedly, WD plans to split into two separate business units: one focused on producing hard disk drives (HDDs) and the other on NAND flash memory and SSDs. This strategy is expected to enhance operational efficiency within each unit, allowing them to concentrate on their core strengths and ultimately achieve greater market value.

According to the report, WD CEO David Goeckeler will lead the NAND and SSD unit, while Executive Vice President of Global Operations Irving Tan will take on the role of CEO for the HDD business

Citing calculations by an analyst, the report notes that  the standalone value of WD’s NAND and SSD business could range from USD 10 billion to 22 billion. This suggests that spinning off these businesses could lead to a higher market valuation for the company.

The report states that the market has not yet fully recognized the value of WD’s NAND business, and that the combined independent value of the two companies post-split will be at least USD 30 billion, with the potential to exceed USD 40 billion.

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(Photo credit: Western Digital)

According to the report from MoneyDJ, Western Digital (WD), a well-known memory device manufacturer, reported its latest financial report after the American stock market closed on April 25. Both revenue and profit for 1Q24 were better than market expectations, mainly driven by the robust AI demand and cloud service providers’ proactive acts in AI investment, which significantly boosted data storage demand.

According to WD’s financial result for fiscal third quarter 2024 (ending March 29, 2024), revenue increased by 23% YoY to USD 3.46 billion, surpassing the expected USD 3.36 billion from LSEG’s survey. Gross margin rebounded to 29%, up 18.8 percentage points from the same period last year at 10.2%; Net profit turned from a loss to a gain of $110 million, or USD 0.34 per share, far better than the net loss of USD 580 million, or net loss of USD 1.82 per share in the same period last year. Excluding one-time expenses, adjusted earnings per share were USD 0.63.

Photo credit: WD

The main “Cloud” segment saw robust revenue growth of 29% in the third quarter to USD 1.55 billion, mainly fueled by enterprises’ acceleration and expansion of data center construction, stimulating memory demand growth, with prices also rising accordingly.

Its competitor Seagate, a HDD manufacturer, also reported impressive financial results on April 23, with last quarter’s performance beyond expectations. The company expected continued growth of AI-driven memory demand and give a positive business outlook for this quarter.

Looking ahead to fiscal fourth quarter 2024 (ending June 28, 2024), WD estimates revenue will be USD 3.6-3.8 billion; adjusted earnings per share are estimated to be USD 0.90-1.20.

WD previously announced the separation of its two main product divisions, HDD and NAND Flash. The NAND Flash division will be spun off into a new company and go public, and the transaction is expected to be completed in the second half of 2024. Moving forward, WD will focus on its core HDD business to bring greater value to shareholders.

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(Photo credit: WD)

Following the announcement of a price increase by the U.S. memory giant Western Digital Corporation (WDC), hard drive manufacturer Seagate Technology has also announced that it will raise prices in response. Seagate stated that they will immediately increase prices for new orders and demand exceeding previous commitments.

Due to the demand for high-capacity HDD products driven by AI, coupled with reduced production by hard drive manufacturers, the overall HDD supply is unable to meet demand, leading to soaring prices. According to a formal letter from Seagate to its customers, demand recovery continues across several segments of their business, and the reduced manufacturing capacity is limiting their ability to meet all of their customers’ demand and is resulting in longer lead times. Additionally, ongoing global inflationary pressures continue to impact costs.

As a result, Seagate Technology will implement price increases for new orders and demand exceeding previous commitments, and they anticipate ongoing supply constraints, indicating that prices will continue to rise in the coming quarters.

As per industry sources cited by TechNews, there is an expectation of ongoing supply shortages for high-capacity HDD products this quarter and potentially throughout the entire year. The same source also indicates that, HDD prices are expected to continue rising in the second quarter of this year, with increases estimated at 5% to 10%.

Previously, on April 8th, WDC notified customers of ongoing price increases for NAND Flash and hard drive products, confirming the supply shortage of HDDs.

In the notification, it was indicated that they are seeing higher than expected demand across their entire flash and hard drive portfolio resulting in supply constraints. In addition, supply chain challenges for the overall electronics industry are further impacting supply availability. Given these circumstances, they will continue to implement price increases on flash and hard drive products this quarter, with some changes taking effect immediately.

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(Photo credit: Seagate)

The sweeping AI wave not only keeps AI chips in the market spotlight but also ushers in a new round of opportunities for the memory market. Recently, Citibank announced that SSD will replace HDD in the AI field, citing SSD’s faster speed, which are more suitable for AI training. It is reported that data centers of top US tech companies are shifting from HDD to enterprise SSD.

From consumer electronics to enterprise markets, and now in the era of AI, the battle between SSD and HDD is underway once again .

• Can SSD Fully Replace HDD?

Industry sources point out that SSD surpass HDD by nearly 10 times in terms of access speed, while HDD boasts the advantage of lower cost.

According to a previous report from Nikkei Asia, in recent years, as NAND Flash prices declined in a downward cycle, the cost gap between SSD and HDD has begun to narrow, enabling SSD to gradually replace HDD in some fields. For instance, in consumer PC storage devices below 2TB, HDD have been phased out and replaced by SSD.

This seems to indicate that SSD has significantly outpaced HDD, but it is still difficult to say that SSD will completely replace HDD. After all, compared to consumer products, data centers have higher performance requirements for SSD. Furthermore, from a cost perspective, enterprises face significant pressure if they want to fully substitute SSD for HDD.

The current AI boom has provided opportunities for the development of both HDD and SSD, with a surge in demand for high-capacity products leading to price increases.

Industry sources reveal that HDD manufacturers reduced supply due to poor market conditions last year. With the arrival of the AI wave, supply of HDD outbalanced demand in 2H23, driving prices higher. From 3Q23 to 1Q24, HDD prices have increased by 10-20% overall. The latest reports show that Western Digital has recently notified customers of continuous price increases for HDD products. Industry sources expect HDD market prices to continue to rise in 2Q24, with increases ranging from 5% to 10%.

Likewise, SSD market is also facing supply shortages, especially in the enterprise SSD segment. TrendForce predicts a strong increase of about 13-18% in NAND Flash contract prices in 2Q24, with enterprise SSD contract prices expected to increase by 20-25% QoQ, representing the highest among all product lines.

At present, SSD and HDD are expected to coexist and progress together. However, looking ahead to the future, some memory manufacturers hope that SSD can continue to advance and even replace HDD.

In 2023, Shawn Rosemarin, Vice President of Research and Development Department of Pure Storage, stated that HDD would be completely phased out within 5 years. HDD consume too much power; 3% of global electricity used for data centers, and one-third of this power consumption comes from storage systems, the majority of which are mechanical hard drives. The cost difference in operating such large-scale deployments is striking. If the storage device is shifted to SSD, power consumption will be reduced by 80-90%.

However, HDD manufacturers have countered this statement. Rainer Kaese, Senior Manager of HDD Business Development Department at Toshiba, believes that HDD will continue to exist for some time. In the long run, they will continue to be cheaper than SSD, and data center engineers will develop more efficient HDD to meet stricter power consumption requirements.

The debate between these two sides reveals the respective strengths and weaknesses of SSD and HDD. As manufacturers continue to enhance performance, reduce costs, and lower power consumption, the competition between SSD and HDD is expected to continue in the future.

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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

(Photo credit: Western Digital)

The demand for large-capacity HDD products driven by the artificial intelligence market has caused overall HDD prices to surge. According to the latest updates, American memory giant Western Digital confirmed for the first time on April 8th that there is a supply shortage for both HDD and SSD. They issued formal customer letters notifying of ongoing price adjustments for NAND Flash and hard drive products.

Western Digital stated that the demand for both flash memory and hard drive products has exceeded expectations, leading to supply constraints. These challenges in the electronics industry’s supply chain further affect availability. This quarter, they will continue to adjust prices for flash memory and hard drive products, with some changes taking immediate effect.

These updates apply across the company’s entire product portfolio, and Western Digital indicated that pricing adjustments will be frequent in the future. Additionally, the company’s ability to handle unplanned demand and orders is quite limited, so any order changes require early notification. They also anticipate that unplanned demand may lead to extended delivery lead times.

TechNews’ report further point out that, combining current market reports, the overall price increase for HDDs has accumulated between 10% to 20% from the third quarter of 2023 to the first quarter of this year, due to memory manufacturers implementing production reduction strategies aimed at quantity-based pricing.

Industry sources cited by TechNews’ report anticipate that the tight supply situation for large-capacity HDD products will continue into this quarter and potentially extend throughout the year. Specifically, HDD prices are expected to continue rising in the second quarter of this year, with an anticipated increase of 5% to 10%.

As per TrendForce’s  data for 3Q23, Samsung maintained its position as the top global NAND flash memory manufacturer, commanding a significant market share of 31.4%. Following closely, SK Group secured the second position with a 20.2% market share. Western Digital occupied the third position with a market share of 16.9%, while Japan’s Kioxia held a 14.5% market share.

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(Photo credit: Western Digital)