Due to a slump in both volume and prices, revenue in the enterprise SSD market fell 47.3% sequentially to nearly US$2 billion in the first quarter of 2023, according to TrendForce.
Off-season effects and rising inflation dampened purchase enthusiasm in markets such as the North American server ODM segment and China. As a result, inventory levels for enterprise SSD vendors increased throughout the first quarter. A drop in output did not help either, forcing suppliers to cut prices in attempt to increase shipments. Furthermore, severe inflationary pressures reduced purchasing power in these sectors, resulting in a simultaneous drop in both volume and price for enterprise SSDs, TrendForce indicated.
However, following inventory correction in the first quarter, a modest rise in purchasing demand for server ODM orders is expected in the second quarter. As a result, revenue from enterprise SSD providers is expected to return to growth in the second quarter, TrendForce said.
Despite a 39.7% decline in enterprise SSD revenue to around US$296 million, Kioxia rose to third place in the first quarter. Kioxia's long-term trajectory, according to TrendForce, will be strongly influenced by the likely conclusion of its merger with Western Digital. Merging with WDC has the potential to reshape Kioxia's future R&D strategy for enterprise SSD products.
If further possibilities for a merger with Kioxia emerge, WDC may shift its focus to the development of client SSDs. Kioxia may also dedicate additional efforts to enhancing customer verification processes. This intentional reallocation of resources may boost WDC's enterprise SSD shipments while also encouraging industry growth, TrendForce said.
Since the fourth quarter of 2022, Samsung has been increasing its market share through competitive pricing. However, significant revisions in server shipment targets for 2023 resulted in a decline in enterprise SSD orders during the first quarter, particularly from North American customers, TrendForce indicated. As a result, Samsung's enterprise SSD revenue for the first quarter decreased by 55% sequentially to US$801 million. As North American customers continue to adjust their inventories, Samsung's revenue could fall further in the second quarter, but a rebound is anticipated for the second half of the year, TrendForce said.
With the release of a 128-L PCIe 5.0 product, Samsung has gained a significant advantage in technology. As the penetration rate of Arm-based server platforms rises and the demand for AI servers is expected to increase, Samsung's market leadership will depend on its ability to satisfy the transmission speed requirements of these burgeoning platforms, according to TrendForce.
SK Group (SK Hynix & Solidigm) was similarly impacted by the market downturn, reporting enterprise SSD revenue of $458 million for the first quarter, a 36.4% decrease quarter over quarter, TrendForce said.