Demand for AI-capable infrastructure is causing server buyers to significantly up orders for enterprise solid state drives (SSDs), and this is having an inflationary impact on the price of flash-based storage units.

These details come courtesy of market watcher TrendForce, which estimates that the growth rate of SSD demand for AI applications is likely to exceed 60 percent, with suppliers accelerating development of higher capacity products.

The inevitable downside of ballooning demand for enterprise SSDs is a spike in prices. Contract prices for this category rose by more than 80 percent over the period from 4Q23 to 3Q24, TrendForce claims.

SSDs play a key role in AI model training thanks to their low latency and high throughput. They are primarily used for storing model parameters including weights and deviations, the analyst says, but are also useful for creating checkpoints - periodically saving a snapshot of AI model progress to aid recovery in case of interruptions.

The flash-based devices are useful in inferencing too, where SSDs allow for data updates to models in real time to fine-tune outcomes. As more information is generated, the storage capacity required also increases, making high-capacity SSDs such as TLC/QLC 16 TB or larger the preferred choice for these applications.

As a consequence, the market for AI server SSDs has seen an upswing in demand for products larger than 16 TB from the second quarter onwards, TrendForce reports. It estimates that overall capacity of AI-related SSDs procured during 2024 will exceed 45 EB (exabytes), where 1 EB is equal to 1,000 petabytes or a million terabytes.

Meanwhile, demand for AI servers is touted to push the average annual growth rate for SSDs to more 60 percent over the next few years, with SSDs that target AI potentially rising from 5 percent of total NAND Flash consumption in 2024 to 9 percent in 2025.

Earlier this year, system builder Dell warned of a hike in both DRAM and SSDs prices of about 20 percent, saying it expected to see "a step function in cost in the second half of the year driven primarily by DRAM and SSD," and it would be forced to "adjust its prices accordingly."

An earlier report from TrendForce also revealed the growth in NAND flash revenue among chipmakers; it was up 28.1 percent to $14.71 billion in the first calendar quarter of 2024, fueled by demand for enterprise SSDs to fit out servers for AI processing.

One SSD maker, Western Digital, recently reported revenue up 41 percent to $3.8 billion for the quarter ending June 30, compared with the same period last year, and said it expects enterprise SSDs to represent a "double-digit percent share" of its portfolio mix for its fiscal 2025.

IDC's Senior Research Director for EMEA Andrew Buss agreed AI demand is propelling the price of SSDs, as well as other components.

"GenAI demand is certainly driving up demand for high performance storage, and this is resulting in some limitations in NAND flash availability which has had the tendency of driving up storage prices," he told us.

From personal experience Buss has noticed consumer SSDs have seen "a significant and sustained uplift in overall price for the capacity."

Trendforce says that in response, suppliers are accelerating process upgrades and aiming for products that user higher density NAND flash components to drive up capacity, and this will eventually produce 120 TB enterprise SSDs. ®

https://www.theregister.com//2024/08/13/demand_for_ai_servers_ssd_pricing/