Can't stop the price increase? A brief analysis of the reasons behind the SSD price increase

In recent times, the biggest news in the SSD market may be the sharp increase in market quotations of SSD products from various brands in unison. This round of sharp price increases has not only affected the SSD market, but also the memory stick market, and the increase in memory prices is also quite terrifying.

At the same time, unlike previous small-scale hard disk market price fluctuations caused by natural disasters or man-made disasters (natural disasters refer to the rise in mechanical hard disk prices caused by floods in Thailand a few years ago; man-made disasters refer to the fire at Samsung's wafer factory in Xi'an a few years ago, which caused the rise in solid-state hard disk prices), this round of price increases is a large-scale increase within the industry and an overall rise in the entire storage industry.

So, we can't help but ask, with the upgrading of technology and the continuous upgrading of manufacturing processes, the price of storage products should have been falling. Why did it suddenly rise strongly in the last quarter of 2016? In particular, the solid-state drive market has been experiencing a continuous decline in prices in the first three quarters. Why did it return to a high point at the end of the year? What are the reasons behind this round of price increases?

Below, the author will briefly analyze the reasons behind this round of price increases in solid-state drives and even the entire storage industry from an industry perspective. Similarly, the following views can only represent the author’s personal opinions.

3D NAND replaces 2D NAND, but mass production is insufficient

Before analyzing the reasons for the increase in SSD prices, we must first clarify a point of view, that is, in SSD products, and even in the entire storage product line, excluding other expenses such as technology and marketing, the core component with the highest procurement cost in the entire product line is the storage unit, and the raw material of the storage unit is the wafer, or more down-to-earth, the flash memory particle.

It can be said that whether the factory price of flash memory particles is stable directly determines the actual price of solid-state drive products. It is precisely because of the importance of flash memory particles that major technology companies around the world are building their own wafer fabs and developing more advanced flash memory particle products. However, as the world's most cutting-edge and complex industry, the manufacturing of flash memory particles has always been monopolized by several global companies. Specifically, more than 90% of the global flash memory particle market is monopolized by six semiconductor manufacturers, including Samsung, Intel, Toshiba, SanDisk, Hynix, and Micron.

Having said so much, everyone should be able to summarize a simple fact, that is, the price of storage products such as solid-state drives is directly linked to the ex-factory price of flash memory particles, and the manufacturing of flash memory particles is monopolized by the above six companies. Therefore, this round of solid-state price increases must be related to the above six companies.

Next, let's briefly talk about the first major reason for the price increase of storage products such as solid-state drives. That is, the 2D NAND (NAND can be simply understood as flash memory particles) production line has been replaced by 3D NAND, and the mass production of 3D NAND is seriously insufficient, resulting in the overall insufficient total factory output of flash memory particles. The supply cannot meet market demand. Major manufacturers are competing for the already insufficient flash memory particles, and the ex-factory price of flash memory particles has been raised in the competition, which is reflected in the consumer link as a sharp increase in retail prices.

So what is 2D NAND? What is 3D NAND? Due to the limited space and the focus of the article, I will not elaborate on the differences and connections between 2D NAND technology and 3D NAND technology. You just need to understand that the manufacturing cost of 3D NAND technology is much lower than that of 2D NAND technology. However, due to the immaturity of the technology, even the six major flash memory manufacturers with monopoly nature have not been able to fully master this high-end process. Currently, only a few manufacturers such as Samsung and Micron have mass-produced and released products in the consumer market.

Mobile phones grab some flash memory, causing price fluctuations

In the above article, we have said that the factory price of flash memory particles affects the price of storage products such as solid-state drives. However, we also need to know that the internal memory of digital devices such as mobile phones is also made of flash memory particles. More importantly, these flash memory particles used in digital devices such as mobile phones are also provided and produced by the above-mentioned semiconductor companies. What is more noteworthy is that these flash memory particles and the flash memory particles of solid-state drives come from the same production line.

Having said so much, what I want to express is that the shipment volume of large-capacity mobile phones has continued to surge, which has greatly consumed the flash memory particles whose production capacity is already insufficient. In this situation where there are more people than meat, the flash memory particles that can be used to make solid-state drives have become even more scarce.

As the saying goes, things are more valuable because they are scarce. In the fierce competition among major storage manufacturers, the ex-factory price of flash memory particles has been rising again and again, which has been reflected in the consumer end, that is, the large-scale increase of various storage products. Especially from the middle of this year to the third quarter, major mobile phone manufacturers around the world have launched new mobile phones with large capacity. Products such as Samsung Galaxy S7, Huawei Mate 8, Xiaomi 5, vivo Xplay 5, OPPO R9 Plus, Apple iPhone7, etc. have shipped tens of millions of units, which has exacerbated the scarcity of flash memory particles.

What is even more dramatic is that several flash memory particle manufacturers such as Samsung, Toshiba/SanDisk are the exclusive suppliers of flash memory particles for Apple. Almost most of the flash memory spot and high-quality particles will be supplied to Apple's new products as soon as possible.

At the same time, Apple will release new laptops and even tablets in the fourth quarter, and these devices will still consume a considerable proportion of flash memory particles, which will further aggravate the scarcity of flash memory particles and trigger price increases in storage markets such as solid-state drives.

Prediction of SSD price regression

So, with the price of SSDs rising so much, when will it return to normal? According to the author's understanding, the major manufacturers that control the global flash memory particle manufacturing rights mentioned above have been working overtime to develop more stable and mature 3D NAND technology.

First, Samsung, which first introduced 3D NAND technology, is reported to have mass-produced its latest 64-layer 3D NAND product and will be fully available by the end of this year.

Next is the Japanese giant Toshiba. As the most low-key flash memory manufacturer, Toshiba has rarely disclosed the progress of 3D NAND technology. However, when I attended Toshiba's product meeting not long ago and asked about Toshiba's 3D NAND progress, Toshiba vaguely stated that it will fully mass-produce 64-layer 3D NAND products in 2017.

As another flash memory manufacturer in South Korea, SK Hynix has already sent samples of its 48-layer 3D NAND and entered the mass production stage. In 2017, it will skip the 64-layer NAND technology and boldly challenge the 72-layer NAND.

Micron Semiconductor has chosen to skip 48-layer NAND flash memory in 3D NAND technology and plans to directly mass-produce 64-layer NAND particles in 2017. Finally, semiconductor giant Intel has taken a unique approach to 3D flash memory particles and will launch the Optane series of products based on 3D Xpoint technology in 2017.

Seeing this, everyone should understand that almost all major manufacturers have chosen 2017 as the key year for mass production of 64-layer 3D NAND flash memory particles. Therefore, it can be expected that this round of price increases in the SSD market will continue until the end of the year. As for the price returning to normal, it will only be when the 3D NADN flash memory particles of major manufacturers are fully supplied. As for when that time will come, I believe it will not be too long.

As a winner of Toutiao's Qingyun Plan and Baijiahao's Bai+ Plan, the 2019 Baidu Digital Author of the Year, the Baijiahao's Most Popular Author in the Technology Field, the 2019 Sogou Technology and Culture Author, and the 2021 Baijiahao Quarterly Influential Creator, he has won many awards, including the 2013 Sohu Best Industry Media Person, the 2015 China New Media Entrepreneurship Competition Beijing Third Place, the 2015 Guangmang Experience Award, the 2015 China New Media Entrepreneurship Competition Finals Third Place, and the 2018 Baidu Dynamic Annual Powerful Celebrity.