SSD prices are expected to rise 10 – 20 percent in the coming month, and as of last week, lead times have gone from readily available to 12 -14 weeks. This is a quick change in a market where, until now, prices have been declining due to too much supply. But, while the market volatility has happened quickly, the build up to current state started in late spring with a perfect storm of geopolitical factors, a plant disaster and measures by manufacturers to reduce supply – namely in the NAND market, which is a key component in SSD production.
The NAND market has been saturated with too much supply, which was only exacerbated when, in May, producers Samsung and Micron complied with the Trump administration’s sanctions against Huawei and reduced memory chip shipments.
Come the first days of summer, though, the tides in the market were beginning to turn.
In June, Toshiba experienced a power outage that hindered production of the No. 2 producer of NAND flash and its joint venture partner, Western Digital. A loss of 6 exabytes of NAND flash was estimated for Western Digital. The JV is a 40/60 split, which led analysts from Wells Fargo to estimate Toshiba may have lost about 9 exabytes. If this is true, the overall market supply reduced to 25 exabytes.
In July, the Japan – Korea trade war commenced, thus increasing the market turbulence. Japan implemented export restrictions to Korea on the raw materials used to make chips leaving SK Hynix and Samsung, both Korean companies who have a combined 46.8 percent NAND market share, in the crosshairs. SK Hynix told Reuters that, while they were trying to secure inventory, the company could not rule out a production disruption.
Around the same time, SK Hynix announced it would in fact further decrease production from 10 percent they had announced in early spring to more than 15 percent. Micron stated it would follow suit by cutting its production.
In addition to the drama in the NAND market, the US-China trade war escalated in late August with the Trump administration adding SSDs to the list of items that would be tariffed beginning Sept. 1.
Fall is now upon us, which is also when cyclical demand increases for SSDs begins, and OEMs, like the UK-based Novatech, have been stocking up in preparation for supply to become short. Therefore, making it more difficult to get SSDs timely and at the prices that were seen earlier this year.
Jeremy Pierce, director of purchasing for the Americas at Fusion Worldwide, surmised, “We’ve seen an increasing amount of SSD shortages in the past few months, with demand finally beginning to outpace supply. If things continue along this path, pricing may continue increasing through the first month of 2020.”
