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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• [News] SSD vs. HDD: Battle Gets Underway Again
• [News] Western Digital Customer Letter Confirms HDD Supply Shortage! NAND Flash and Hard Drive Prices Continue to Rise

(Photo credit: Seagate)

Recently, major memory manufacturers such as Micron, Samsung, and Western Digital have all announced price hikes. Industry sources indicate that since 1Q24, memory manufacturers stay steadfastly in controlling supply and raising prices. Coupled with the impact of the recent earthquake in Taiwan, the supply-demand imbalance has further driven up memory prices.

However, it’s worth noting that according to industry experts, the primary driving force behind the recent price increases in the memory market is still from manufacturers. As to the demand side, significant growth are mainly seen in industrial control needs, AI large models, and automotive intelligentization, while other fields have not yet seen obvious growth.

Regarding the impact of the 403 earthquake, TrendForce expects the influence on the output bit of DRAM in 2Q24 to remain within 1%. Specifically, due to Micron’s earthquake-related damages being more concentrated in advanced processes, TrendForce does not rule out the possibility of Micron’s Server DRAM final transaction prices increasing. The subsequent price trends still require observation.

• Has Micron Increased Prices by More Than 20% in Q2?

On April 9th, Taiwanese media reported that Micron has proposed price increases of over 20% for its products in Q2 to most customers, with price negotiations still ongoing.

It is reported that after the earthquake on April 3, Micron temporarily suspended the announcement of DRAM product quotation for the second quarter.

Currently, TrendForce maintains its previous expectations for the second-quarter contract price of Mobile DRAM, with an increase of about 3-8% QoQ. As for Server DRAM, due to the earthquake-related damages to Micron being more concentrated in advanced processes, TrendForce does not rule out the possibility of Micron’s Server DRAM final transaction prices increasing, and the subsequent price trends still require observation. In regard to HBM, since most of Micron’s HBM 1beta production and TSV lines are located in Hiroshima, Japan, supply or price remain unchanged.

In the spot market, some module manufacturers like Kingston and ADATA have restarted quoting prices, but no price increase has been implemented yet. TrendForce believes that the earthquake’s impact on pushing up prices is limited.

Overall, due to the relatively low inventory of DDR3, there is still room for price increases. Whereas, DDR4 and DDR5 inventory is comparatively sufficient, coupled with weak demand, which are expected bring the situation of small consecutive price increases caused by the earthquake to return back to normal within a few days.

• Western Digital Continuously Increases NAND Flash and HDD Prices

On April 8, Western Digital confirmed for the first time that there is a shortage of supply for both HDD and SSD, and issued formal customer letters notifying of price adjustments for NAND Flash and hard drive products. Western Digital stated that the demand for flash memory and hard drive products has exceeded expectations, leading to supply shortages. Prices for these products will continue to be adjusted this quarter, with some adjustments taking immediate effect.

Western Digital acknowledged that it will perform the frequent price reviewing and adjust it accordingly. Furthermore, Western Digital also stated that its ability to handle orders outside of the plan is quite limited, so any order changes need to be notified in advance.

• Samsung Raises Prices of Enterprise SSD?

In the past two weeks, rumor has it that enterprise SSD fell into a supply shortage. According to industry sources, due to the optimistic outlook for SSD to become a part of AI in the future, paired with recent supply tensions, their prices have started to rise. Samsung is rumored to increase prices for enterprise SSD by 20-25% in 2Q24, reversing the downward trend seen in 2023.

Reportedly, Samsung initially planned to raise prices by about 15% compared to the previous quarter, but higher-than-expected demand led Samsung to expand the price hike. Samsung’s enterprise SSD accounts for approximately half of the market share, thus exerting a significant influence on pricing decisions.

A study by TrendForce on March 7 shows that in 4Q23, Samsung ranked first globally in the 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%).

• TrendForce Released Forecasts for DRAM and NAND Flash Contract Prices for 2Q24

In terms of overall price trends, TrendForce estimates that although the inventory of DRAM suppliers has decreased, it has not yet returned to a healthy level. Furthermore, as they gradually shake of the loss situation, suppliers are expected to further increase their capacity utilization rates.

However, due to the lackluster overall demand outlook for this year and the large price increases by suppliers since 4Q23, the momentum for inventory replenishment is expected to weaken. Therefore, TrendForce anticipates that the quarterly increase in DRAM contract prices in the second quarter will converge to 3-8%.

Regarding NAND Flash, TrendForce stated that, except for Kioxia and Western Digital, which have been increasing their capacity utilization rates since 1Q24, other suppliers are generally maintaining a low production strategy.

Although the procurement volume of NAND Flash in 2Q24 has declined slightly compared to 1Q24, the overall market climate continues to be influenced by reduced supplier inventory and the impact of production cuts. Consequently, TrendForce forecasts a strong increase of around 13-18% in NAND Flash contract prices in 2Q24.

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• [Insights] The Spot Price of DRAM Continues to Decline, Weak Trading Volume for NAND Flash
• [Insights] DRAM and NAND Flash Spot Prices Drop as Demand Weakens

(Photo credit: Samsung)

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.

Read more

• [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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• [News] AI Market Growth Rescues HDD, Driving Half-Year Price Surge of 20%
• [News] SSD Prices Keep Rising

(Photo credit: Western Digital)

With the effective reduction of production by suppliers, the price of memory is rebounding, and the semiconductor memory market finally shows signs of recovery. From the perspective of market dynamics and demand changes, NAND Flash, as one of the two major memory products, is experiencing a new round of changes.

Suppliers are in Constant Motion: Increasing Prices and Adjusting Production Capacity Utilization

Since 3Q23, NAND Flash chip prices have been on the rise for several consecutive months. TrendForce believes that, under the precondition of a conservative market demand prospect for 2024, chip price trends will depend on suppliers’ production capacity utilization.

There have been frequent developments in the NAND flash memory industry chain, with some manufacturers indicating a willingness to raise prices or increase production capacity utilization.

Wallace C. Kou, General Manager of NAND Flash Supplier SIMO, stated that prices for the second quarter of NAND Flash have already been settled down, which will increase by 20%; some suppliers have started to make profits in the first quarter, and most suppliers will earn money after the second quarter.

Pua Khein Seng, CEO of PHISON, believes that further price increases for SSD solid-state drives may significantly reduce market demand. If prices are too high, demand may begin to waver again. He suggested that NAND manufacturers stop reducing production and start meeting demand, rather than allowing low supply and high demand to push up prices.

From the perspective of the industry chain, Samsung’s Xi’an fab has significantly increased its operating rate, and Kioxia is considering adjusting its production reduction plan.

As for Samsung, Samsung Electronics’ NAND Flash fab in Xi’an, China, has restored its operating rate to around 70%, according to a report from the global media “THE ELEC”. In 2H23, Samsung lowered the operating rate of the fab to 20-30%. This is the lowest point for the fab since the decline in memory prices and demand began in late 2022.

The Xi’an fab is Samsung Electronics’ only memory semiconductor production base located outside of Korea, with a monthly production capacity of 200,000 300mm wafers, accounting for 40% of Samsung’s overall NAND output.

Samsung Electronics plans to upgrade its Xi’an NAND Flash fab to the 236-layer NAND process and kick-off large-scale expansion. It is understood that the company will gradually introduce equipment capable of producing 236-layer NAND at the Xi’an fab in 2024.

As to Kioxia, the company recently stated that it will re-evaluate the production reduction plan for memory medium flash, used in electronic devices, implemented since 2022 and ramp up production. Kioxia expects that by March of this year, the utilization rate of its NAND fab will return to around 90%, relying on demand.

However, TrendForce pointed out that the previously predicted quarter-on-quarter increase in contract prices for NAND Flash in 1Q24 is about 20-25%. Although the overall demand outlook for the second quarter is still conservative, NAND Flash suppliers have adjusted their production capacity utilization since late in 4Q23 and early 1Q24.

In addition, NAND Flash buyers have already begun to gradually replenish their inventories in the first quarter. Therefore, the quarter-on-quarter increase in contract prices for NAND Flash in the second quarter will converge to 10-15%.

Market Landscape: Samsung Still Dominates, Two Major Manufacturers May Merge

Currently, the NAND Flash market is still dominated by the five major manufacturers, with Samsung and SK Hynix accounting for the lion’s share.

As per a research from TrendForce on March 6, in 4Q23, Samsung still firmly held the top position in the NAND Flash market, with its market share increasing from 31.4% in the previous quarter to 36.6%; next was SK Group, with its market share increasing from 20.2% in the previous quarter to 21.6%.

Following them were Western Digital, whose market share decreased from 16.9% in the previous quarter to 14.5%, Kioxia, whose market share decreased from 14.5% in the previous quarter to 12.6%, and Micron, whose market share decreased from 12.5% in the previous quarter to 9.9%.

It is worth noting that Western Digital’s plan to merge with Kioxia, which has been in progress since 2021, has not yet been concluded. According to sources cited by a report from Japanese media 47news, the merger negotiations were opposed by a competitor, leading to their termination. Earlier reports from Japanese media Asahi News indicated that both parties might resume merger negotiations at the end of April.

Reportedly, Bain Capital is in talks with relevant companies to restart merger negotiations between Western Digital and Kioxia. If the merger is successful, the newly formed company will control one-third of the global NAND Flash market.

If the merger is successful, the new company founded by Western Digital and Kioxia will have a market share of over 30%, leading to a variation in the market landscape of the NAND Flash market.

Recently, Western Digital has taken action again. On March 5, the company announced that after splitting its NAND Flash business, it will retain its original name and focus on its core HDD business. It also stated that the split transaction is expected to be completed in 2H24.

In light of the announcement, Irving Tan, the current Executive Vice President of Global Operations at Western Digital, will serve as the CEO of the remaining independent HDD company, continuing to run under the Western Digital brand. The current CEO, David Goeckeler, will be transferred to the newly established company in the NAND Flash department and serve as the CEO of the new company.

The news of Western Digital’s divestiture of its NAND Flash business, which has long been plagued by oversupply, has sparked widespread discussion in the industry. However, the company believes that this move will accelerate innovation and bring new growth opportunities. At the same time, due to the independent capital structure, the operating efficiency of the two entities will be higher compared to a unified company.

Outlook: Q1 NAND Flash Industry Revenue May Increase by 20% QoQ

In terms of industry revenue, according to the latest research from TrendForce, NAND Flash industry revenue reached USD 11.49 billion in 4Q23, an increase of 24.5% from the previous quarter.

This was mainly benefited from the recovery of terminal demand due to year-end promotions, and the expansion of orders in the component market by reason of price hikes, as well as the vigorous shipment of bits compared to the same period last year. Meanwhile, companies continued to release views that demand in 2024 will perform better than in 2023, and strategic stocking has been initiated.

Looking ahead to 1Q24, TrendForce believes that with the significant improvement in supply chain inventory levels and prices still on the increase, customers continue to increase purchase orders to avoid the risk of supply shortages and rising costs.

Thereby, despite being the traditional off-season, TrendForce predicts that the industry revenue of NAND Flash in the first quarter will still increase by 20% QoQ due to the continuous expansion of order scale, which stimulates NAND Flash contract prices to increase by an average of 25%.

Read more

• [News] NAND Flash Manufacturers Kioxia and WD Reportedly Set to Resume Merger Talks in Late April
• [News] SK Hynix Rumored to Propose Collaboration with Kioxia for HBM Production in Japan

(Photo credit: Kioxia)