Back in August 2016 we posted a Blog regarding the shortage on NAND memory and the impact it was having on SSD supply. In the blog we outlined the major contributors to the shortage and gave an industry perspective on when supply may recover. Today we are posting this update because the more things change the more they stay the same. Simply put, NAND memory continues to be constrained as demand outpaces volume and the shortage is now expected by some to continue through 2017 and may extend into Q1 of 2018.
Here is the updated Blog revised from August 2016.
We’ve heard a lot recently about the rapid changes in NAND technology that has been driving down the cost per gigabyte and increasing the storage capacity of Solid State Drives but these transitions are having an impact on NAND supply which has led to some shortages of popular size SSDs and some price increases on tier two brands. Typically when people hear mention of the words “shortage” and “NAND” they instinctively think back to the early days of solid state drives when supply was truly difficult if not impossible to find but in this case today as we are talking about a situation that is far more manageable but does require resellers that are heavily vested in SSD to pay close attention to the market in order to properly navigate the situation. In order to do this it is helpful to understand what is causing the shortage, and to try to estimate how long it will last?
In terms of the shortage in NAND, that is being influenced by several factors. First, the overall supply is being impacted by the transition to 3D NAND. As manufacturers like Intel, Samsung, Micron and Hynix convert their factories to 3D NAND they are taking previous production capacity off line to retool the factories. In addition, the manufacturing process for 3D NAND is far more complex than that of 2D NAND so yields are still lower than expected. While the long term benefits of lower cost per gigabyte and increased storage capacity resulting from 3D NAND will benefit the growth of SSD’s, the short term impact of less capacity is helping contribute to the supply shortage. Second, cell phone makers are continuing to consume supply as they release new models and try to meet the consumer expectations for more storage. Last, the market growth for solid state drives is not declining and is only expected to increase as SSDs continue to be deployed in data centers and notebooks as well as make inroads into client PCs particularly for mainstream desktops. All these factors of less manufacturing capacity and increased demand are creating the shortage for NAND.
The next question is how long will the NAND shortage last and what will be the impact to mid-term SSD supply. This is always the million dollar question and the most difficult to answer. We don’t think we will see shortages like we have in the past but we are already witnessing continued constraints on certain capacity stand-alone SSD drives. This does not mean that all drives are unavailable but it does mean that resellers may need to wait longer to get the drive of their choice or look for higher-end drives with more features as manufacturers place a priority on these higher ASP drives. In terms of the duration of the shortage, most manufacturers are now saying the situation will continue through the remainder of 2017 and may possibly extend into Q1 of 2018.
Channel resellers are leveraging the value and benefits of SSD for various verticals such as education, data center storage, surveillance, digital signage and small form factor systems as well as in the area of PC upgrades through HDD replacement so even though the SSD shortage continues, it is important for resellers to watch this market closely for changes in supply and work internally to monitor demand based on existing as well as potential orders.