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)

Low-price SSDs (Solid-state drives) may have become a thing of the past in 2024. The three major memory manufacturers are reportedly pushing up the prices of NAND Flash, leading to rumors of a 50% increase in prices for all SSDs as well. The successive hikes in NAND Flash prices by suppliers are already beginning to impact the end market.

Industry sources cited by ctee have indicated that at the beginning of 2024, there is a continuous stream of news regarding price increases for memory products. However, as of now, new transaction prices have not been observed, and the situation is being closely monitored.

Furthermore, sources cited by ctee also stipulate that, since reaching its lowest point in August 2023, NAND Flash prices have experienced a cumulative increase of approximately 40% to 90%.

Previously, significant losses in NAND Flash led manufacturers to actively reduce production and increase quotes. Currently, manufacturers have yet returned to a break-even condition. It is widely anticipated within the industry that the upward trend in NAND Flash prices will persist into the first quarter of 2024. The aim is to promptly raise prices and achieve a break-even point.

According to TrendForce’s previous estimates, the average quarterly increase in prices for Mobile DRAM and NAND Flash (eMMC/UFS) in the first quarter of 2024 is expected to expand to a range of 18% to 23%. Additionally, it is not ruled out that in a market characterized by limited competition or in situations where brand customers panic and engage in price chasing, the increase in prices could further escalate.

The upward trend in NAND prices has also led to an increase in the prices of storage products in the consumer end market. According to the latest information from the supply chain in China cited by the media outlet mydrivers, it’s reported that SSD products are experiencing their first price hike in nine quarters and manufacturers are planning to continue requesting price increases after 2024 Q1.

An industry source suggests that NAND manufacturers, facing losses, have been actively adjusting prices. Since these manufacturers also produce SSDs for their own brands, their own brands need to follow suit in price increases, potentially influencing the entire market.

Recent rumors have also claimed that the SSDs from memory manufacturers are set to increase by 50%, with some sources suggesting at least a 30% hike. Whether this is an tentative price adjustment or a market-driven price surge prompted by demand remains to be closely observed.

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• Mobile DRAM and eMMC/UFS Prices to Surge 18–23% in 1Q24 as Smartphone Brands Continue Stockpiling, Says TrendForce
• [News] Market Anticipates a 50% Price Surge for NAND Flash in Short-Term

(Photo credit: Samsung)

According to Economic Daily News’ report, after a prolonged period of economy downturn, the market has gradually become optimistic about memories. The effective production reduction by the top five memory manufacturers has led to an increase in memory prices.

This, in turn, has prompted downstream module manufacturers to actively increase their procurement efforts, resulting in shortages of certain products. Industry source indicates that manufacturers, including Samsung and Micron, are expressing intentions to raise prices.

Memory Manufacturers Keen to Raise Prices, Future Demand Monitoring Required

On December 7th, Western Digital had sent out price increase notifications to its customers. In the notification, Western Digital stated that the company would review hard drive product pricing weekly, anticipating a price increase in the first half of the coming year.

Regarding flash memory components, the company expects prices to cyclically increase over the next few quarters, with the cumulative increase likely surpassing 55% of current levels.

It’s worth noting that, at present, many in the industry are optimistic about the cessation and rebound of NAND chip prices. However, currently, suppliers are individually notifying customers of adjusted quotes. In this context, Western Digital has directly issued a price increase notice to customers, with an expected remarkable increase, marking the industry’s first comprehensive significant price hike.

Meanwhile, the latest financial reports of many companies in the memory industry chain show significant improvement compared to the previous period.

Samsung Electronics reported a net profit of KRW 5.5 trillion (approximately USD 4.17 billion) in Q3, transitioning from a loss to profitability. In early November, South Korean media Pulse, citing conversations with numerous insiders in the semiconductor industry, reported that as the Q4 inventory clearance phase nears its conclusion, Samsung is considering a sequential price increase of 20% for Q1 and Q2 of the coming year.

On December 11th, SSD controller chip manufacturer Phison announced its performance report for November, with consolidated revenue reaching NTD 5.407 billion (approximately USD 171.8 million), representing nearly a 5% monthly growth.

According to Phison, the total shipment volume of SSD controller chips continued to recover in November. Among them, the total shipment volume of PCIe SSD controller ICs is expected to grow by nearly 40% year-on-year, setting a new record for the same period in history. This further substantiates the news of a significant surge in the memory market.

In the latest financial report from memory module manufacturer ADATA, the company’s consolidated revenue for October was NTD 3.791 billion (approximately USD 120.4 million), reflecting a monthly increase of 13.43% and a year-on-year increase of 39.59%.

ADATA’s Chairman, Simon Chen, recently mentioned that they anticipate the completion of NAND Flash inventory clearance by the end of this year or the end of January next year. There is an expectation that both DRAM and NAND Flash may face supply shortages next year. 

In addition, DRAM manufacturer Nanya Technology observes a price increase in DDR5, while DDR4 prices have stabilized. There is an expectation of a slight improvement in DDR4 and DDR3 prices in the fourth quarter.

NAND Flash spot prices have surged since the end of September, driven by a collective production cut from suppliers. TrendForce analyst Avril Wu recently mentioned that Samsung’s production capacity has reduced by almost half from its peak, indicating that even cost-efficient manufacturers like Samsung can no longer endure losses. It is suggested that the average wafer price has likely passed its lowest point.

From the supply side, recent industry reports indicate that memory manufacturers are employing a “delaying tactic” in the supply of NAND Flash for the fourth quarter. Module manufacturers attempted to finalize orders for millions of chips in September, but memory manufacturers were reluctant to release the products, and even when they were willing, the quantities and prices were unsatisfactory. Meanwhile, Samsung is reportedly pausing quotations and shipments for NAND products.

Looking ahead to the fourth quarter, the estimated average selling price increase for all NAND Flash products is expected to reach 13%, with an overall quarter-over-quarter revenue growth rate of over 20% in the NAND Flash industry.

It is worth noting that according to TrendForce analyst Avril Wu, with demand not showing explosive growth, the market will be focused on three key considerations. First, after production cuts, the decline in memory manufacturers’ inventory levels has begun, but it remains to be seen whether inventory can continue to shift towards buyers.

Second, it is anticipated that memory manufacturers’ production capacity will slowly increase, and if the market warms up, an early resumption of capacity could lead to supply-demand imbalances again. Lastly, whether end-demand can meet expectations for a recovery, with a particular focus on the sustained orders related to AI, will be crucial.

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• [News] NAND Flash Wafer Surges 25% in November – Continued Price Increases Depend on Manufacturers’ Expansion

(Photo credit: Samsung)

On November 27, Kingston, the global leader in memory modules, and Longsys, acclaimed as key memory module maker in China, jointly announced the establishment of a new joint venture company in China. This strategic move aligns with the resurgence in the memory market, with Kingston taking the lead to step into the Chinese market, reported by UDN News.

As per the collaborative plans between Kingston and Longsys, the joint venture will be established in China, with Kingston holding a 51% stake and Longsys holding 49%. The focus is on expanding the Chinese market together. According to Longsys’ press release, the newly formed joint venture will operate independently, specializing in supplying embedded memory products to the Chinese market. Longsys will oversee product development and technical support, while Kingston will manage procurement and brand-related needs. The capital amount of the new company has not been disclosed by either Kingston or Longsys.

Founded in 1987 and headquartered in California, USA, Kingston is a globally renowned memory module product manufacturer. In 2022, it secured the top position in global memory module and solid-state drive module suppliers. Besides, it leads in the embedded storage market share and holds a dominant position as a key supplier to China’s Tier 1 OEM.

On the other hand, Longsys, established in 1999 and headquartered in Shenzhen, China, has emerged as a key player in the industry. In recent years, it acquired competitors such as Lexar in the United States and Smart Modular in Brazil. Longsys primarily focuses on NAND-related applications and is currently listed on the ChiNext board of the Shenzhen Stock Exchange.

In previous press release, TrendForce once mentioned that facing a volatile market in recent years, Chinese homegrown SSD channels are also actively advancing supply chain configurations. Aiming to step beyond China and into international waters, Chinese companies like Longsys is leading the charge by acquiring shares in Licheng Suzhou and Smart Modular to strengthen downstream module production capacity.

Regarding this joint venture, industry source anticipate that the partnership between Kingston and Longsys, with a focus on embedded storage products and NAND-related applications, will drive substantial demand for NAND chip control ICs.

(Image: Longsys)

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