The demand for high-capacity SSDs in AI-accelerated data centers is expanding at a rapid tempo, and a shortage of NAND supply may occur in the second half of this year, according to industry sources.
In contrast to the consumer electronics category, where demand remains dismal, enterprise storage has witnessed strong growth, sources indicated.
Data centers are being built all around the world, for example, according to sources. In previous years, the typical storage capacity of devices ranged from four to eight terabytes. However, beginning in 2024, there has been a significant increase in storage capacity, with devices offering options of 16TB, 32TB, and even 128TB.
NAND wafer prices have tripled from their previous low point, indicating a significant price increase. The industry believes that NAND prices will stay high until 2025.
The most important sign is that the four major chipmakers—Samsung, SK Hynix, Micron, and Kioxia—have all stated that NAND production output will not be sufficient beyond the third quarter. These major NAND flash manufacturers will be hesitant to cut prices given the substantial demand for enterprise-level storage and data centers, according to sources.
Furthermore, leading NAND flash manufacturers have curtailed capital spending over the last two years, and no new plants will be built in the coming year. Overall supply and demand will continue to be constrained, enabling suppliers to uphold elevated pricing, sources indicated.
Samsung Xi'an fab upgrading to 8th-gen V-NAND
Samsung Electronics' Xi'an fab in China is making great progress toward switching to the eighth-generation V-NAND process, according to sources familiar with the matter.
Samsung has provided data center clients and mobile phone companies with eighth-generation V-NAND chip samples from its Xi'an fab for verification. There are already rumors that the fab has reserved production capacity for 2025 for customers, primarily those in the data center segment.
Samsung previously stated that the 236-layer eighth-generation V-NAND would be mass-produced in 2022. Nevertheless, the company's plans were temporarily suspended as a result of the ongoing tension between the US and China, which impeded the company's ability to obtain investment approval in China.
Samsung resumed equipment upgrades at its Xi'an fab shortly after the prohibition was lifted in October 2023, and the facility's manufacturing lines have transitioned from sixth to eighth generation, according to the sources.
As Samsung is actively promoting the upgrade of its 3D NAND process, almost all major customers have completed the transition to the latest process technology, the sources indicated. Samsung has also told customers that the supply of eighth-generation V-NAND would be insufficient to meet the demand in 2025.
According to market rumors, Samsung plans to raise the price of enterprise-level NAND storage by around 10% in the third quarter, indicating that price rises will slow from the approximately 20% increase witnessed in the second quarter. Nonetheless, the supply shortage may continue to provide Samsung and other chip manufacturers an advantage in future price talks.
Article translated by Jessie Shen
