SSD Prices Soar: A Memory Revolution Driven by the AI Era

Imagine starting your computer, launching programs at lightning speed, and opening large files almost instantly. This is the thrill that solid-state drives (SSDs) offer. Today, we’ll discuss how SSDs have become the darlings of the AI era, with their prices fluctuating and making tech manufacturers’ hearts race.

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The Rise in SSD Prices

Industry insiders might have heard about the skyrocketing SSD prices, with tech giants massively purchasing SSDs to replace HDDs. Many storage manufacturers have also turned the tide thanks to SSDs. So, what exactly is an SSD and what makes it so magical?

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What is an SSD?

An SSD, or Solid State Drive, is a semiconductor-based storage device that typically uses NAND flash memory to store data permanently. Compared to traditional hard drives (HDDs), SSDs are like sports cars while HDDs are like bicycles. SSDs have no mechanical parts, making them faster and more durable. Crucially, they operate with almost no noise and consume less power, giving off a high-tech vibe.

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SSD Structure

To give you a clearer understanding of SSDs, here’s an image showing their internal structure. SSDs mainly consist of three parts: the controller, DRAM cache, and NAND flash memory.

Controller:?This controls all SSD operations, from reading and writing data to executing garbage collection and wear leveling algorithms, ensuring the SSD’s speed and cleanliness.

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DRAM Cache:?Not all SSDs have this. SSDs with independent DRAM cache are known as cached SSDs, offering better random read/write performance. High-end examples include the SK Hynix P44 Pro, Samsung SN850X, and Samsung 990Pro. However, high performance brings higher heat and cost.

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NAND Flash Memory: This is where data is ultimately stored. It affects the SSD’s lifespan and performance significantly. There are several types, such as SLC (single-level cell), MLC (multi-level cell), TLC (triple-level cell), and QLC (quad-level cell), based on how much data each cell can hold. NAND flash memory is non-volatile, meaning it retains data even without power.

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Types of SSDs Based on Interfaces

SSDs are classified into several types based on their interfaces, each offering different performance, price, and application scenarios:

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1. SATA SSD

Interface:?SATA (Serial ATA)

Performance:?Early type of SSD with read/write speeds around 500 MB/s.

Advantages:?Affordable, highly compatible.

Use Cases:?Suitable for general users and office computers.

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2. NVMe SSD

Interface:?NVMe (Non-Volatile Memory Express) via PCIe (Peripheral Component Interconnect Express)

Performance: Extremely fast, usually 3000 MB/s or higher.

Advantages: Extremely high speed, ideal for demanding applications.

Use Cases: Gamers, high-performance computing, video editing.

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3. M.2 SSD

Interface:?M.2 (supports SATA or NVMe)

Performance:?Varies by protocol; M.2 NVMe SSDs are faster.

Advantages:?Compact, easy to install.

Use Cases:?Ultrabooks, tablets, small desktops.

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4. U.2 SSD

Interface: U.2 (formerly SFF-8639)

Performance:?Typically uses NVMe protocol, offering high performance.

Advantages:?Better thermal performance.

Use Cases:?Data centers, servers.

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5. PCIe AIC SSD

Interface:?Direct PCIe slot insertion

Performance:?Extremely high, with read/write speeds in the thousands of MB/s.

Advantages: Highest performance.

Use Cases:?Workstations, high-performance servers.

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Market Trends and Future Predictions

From the third quarter of last year, SSD prices have been climbing, with SK Hynix products seeing a 60%-100% increase by the first quarter of this year. Despite this, the demand from downstream markets like mobile phones and PCs hasn't been as hot. However, driven by AI, both consumer and enterprise SSD prices and demand have been soaring since the fourth quarter of last year.

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Western Digital announced a price increase for NAND flash and HDDs, predicting that enterprise SSD prices will rise by 20%-25% in the second quarter, with consumer SSD prices expected to go up by 10%-15%.

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Samsung plans to raise enterprise SSD prices by 20%-25% in the second quarter. This increase follows a robust first quarter, where enterprise SSD revenue reached $3.758 billion, up 62.9% from the previous quarter.

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First Quarter Highlights for Enterprise SSDs

The shipment of enterprise SSDs in the first quarter of this year was a significant highlight for the storage industry.

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According to TrendForce research, the revenue for enterprise SSDs reached $3.758 billion in the first quarter of 2024, marking a 62.9% quarter-on-quarter increase. This surge was driven by both price and volume increases.

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The surge in large-capacity orders since the fourth quarter of 2023, due to supplier production cuts, has not yet been fully met. Additionally, other end products have expanded orders to build low-cost inventories.

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Simultaneously, the demand for large-capacity storage driven by AI servers has significantly increased. Some North American clients have started to expand the use of high-capacity QLC SSDs to replace HDDs, leading to a more than 20% quarter-on-quarter increase in enterprise SSD purchase volumes (in bits) for the first quarter.

Second Quarter Market Dynamics

The first quarter saw strong performance in the storage market, but the second quarter experienced a price decline due to the traditional off-season. According to CFM flash market reports, the prices for spot SSDs and memory have been fully lowered again since the beginning of June. The imbalance between supply and demand in the spot market has caused channel memory prices to fall rapidly to the levels seen in September last year.

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The second quarter marked the traditional off-season for PCs, leading some PC brands to significantly cut orders, resulting in poor actual delivery conditions for PC terminals. Although SSD prices have fallen, the decline is not significant. In contrast, the demand in areas such as data centers and AI servers remains robust.

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Moreover, recent statements from PC manufacturer Dell indicate that DRAM and SSD prices are expected to continue rising by 20% in the second half of this year, primarily due to rising costs and tight supply-demand relationships. As global raw material prices continue to increase, the production costs of SSDs are also climbing. Additionally, memory manufacturers, in an effort to escape losses and improve profitability, have started seeking price hikes.

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Enterprise SSD Market and Competition

The main customers for enterprise SSDs are from the cloud computing and internet industries, accounting for 67% of the demand.

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From a competitive perspective, the world's top five enterprise SSD brands are Samsung (40%), SK Group (23%), Kioxia (15%), Western Digital (11%), and Micron (11%).

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The demand for high-capacity QLC SSD products is particularly?stronger than for other capacities. In light of?enterprise SSD suppliers, SK Hynix's Solidigm and Samsung are the main ones with certified QLC products.

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Western Digital is actively seeking to increase shipments of high-capacity storage products and plans to mass-produce 162-layer QLC SSDs. Additionally, it will begin collaborating with third-party controller manufacturers to develop the next generation of PCIe 5.0 SSD products.

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Conclusion

In summary, SSDs have become crucial in the AI era, with their prices reflecting the high demand. While consumer markets might see some fluctuation, the enterprise market, driven by cloud computing and internet industries, continues to thrive, especially with the growing adoption of QLC SSDs for higher capacity. As production costs rise and supply tightens, SSD prices are likely to keep increasing.