NAND flash industry revenue is surfing a growth wave thanks to demand for solid state drives (SSDs) in AI servers, meaning increased prices for buyers as OEMs rush to stockpile components.

The latest figures indicate that worldwide NAND flash revenue grew 28.1 percent to $14.71 billion in the first calendar quarter of this year, according to market watcher TrendForce.

Q1 2024 sales ranking of branded NAND flash makers

This was underpinned by demand for enterprise SSDs to fit out servers for AI processing, which began in February and subsequently led to large orders, it says.

In response, PC and smartphone vendors started increasing their inventory levels to manage rising prices, a move that has pushed up the cost of NAND flash as well as increasing shipment levels, TrendForce claims.

Things look set to change slightly for Q2 shipments. Consumer demand remains below expectations, TrendForce says, while those PC and smartphone makers have largely raised their NAND inventory levels, leading to more conservative purchasing policy.

On the other hand, ballooning enterprise SSD orders are continuing to push up the average price of NAND Flash by 15 percent, leading the analyst to forecast 10 percent sequential growth in Q2 NAND revenue.

Among the flash chipmakers, Samsung maintained leadership in the market and saw a 28.6 percent spike in revenue to $5.40 billion, compared with the previous quarter. Despite a cautious outlook for consumer orders in Q2, TrendForce forecasts that inflationary NAND flash contract prices will see Samsung’s topline grow by another 20 percent.

Second placed SK Group, comprising SK hynix and Solidigm, saw an even larger increase in revenue of 31.9 percent to $3.27 billion, due to ramping orders from smartphone and server vendors. It is also forecast to see growth in shipments leading to another step up in revenue of about 20 percent in Q2.

Kioxia, Toshiba’s former memory biz, is in third place with NAND flash revenue of $1.82 billion. This represents a 26.3 percent quarterly increase, despite the company’s shipments being affected by production cuts in the previous quarter. TrendForce expects it to also grow Q2 revenue by about 20 percent, supported by more flexible pricing that will boost its enterprise SSD shipments.

US chipmaker Micron just overtook Western Digital to claim the fourth spot in Q1. The company is said to have benefited from slightly lower prices than its competitors, resulting in a whopping 51.2 percent growth in revenue to $1.72 billion.

Western Digital's Q1 shipments were hit by a decline in retail market demand, according to TrendForce. Despite this, the rising NAND contract prices led to a 2.4 percent revenue increase to $1.71 billion.

TrendForce says that Western Digital aims to boost its enterprise SSD product line to drive future growth, but because of longer verification times for enterprise products, its short-term shipment growth prospects are limited, with Q2 revenue expected to remain flat.

And it isn’t just enterprise SSDs that have experienced a hike in prices because of AI demand. High capacity rotating hard drives have also seen prices hikes because of the need to store vast amounts of data for AI training, as The Register reported last month.

Hard drive production was cut by as much as 20 percent during the previous two years due to falling orders during the pandemic, and manufacturers have now been caught unprepared for the sudden uptick in demand. ®

https://www.theregister.com//2024/05/30/blame_those_rising_ssd_prices/