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NAND flash shortage end could lead to dramatic pricedrop

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发表时间:2018-08-24 09:48

Impending NAND flashoversupply will lead to price collapse of NAND flash chips and higher capacityenterprise SSDs, according to semiconductor analyst Jim Handy.




an oversupply that will cause prices tocollapse dramatically.

That was the message Jim Handy, generaldirector and semiconductor analyst at Objective Analysis, delivered yesterdayin an annual update on flash technology at the Flash Memory Summit. Handy predictedthe price of NAND flash could drop80% in two quarters followed by more moderate price drops of 30% per year untilthe next shortage happens.

NAND flash shortages and periods ofoversupply tend to be cyclical in nature, and each generally lasts for abouttwo years, according to Handy. He said prices soar during times of shortage,boosting profits for manufacturers who have high motivation to reinvest intheir businesses to avoid paying taxes on those earnings. Those investmentseventually lead to an oversupply that drives the profits out of the businessuntil the growing market catches up with the available capacity, Handy said.

The typical cycle of a two-year NANDflash shortage followed by a two-year period of oversupply could break from theusual pattern, according to Handy. He predicted that the addition of a newChinese NAND manufacturer -- Yangtze Memory Technologies Co. (YMTC) --will lead to an oversupply period of three years rather than the typical twoyears.

Quadrupling of SSD capacityfor same price

But, even though Handy thinks NAND flashchip prices will collapse to cost with the oversupply, he does not expectthe price of solid-state drives (SSDs) to fall in tandem. Instead,Handy expects that a customer paying $1,000 today for an SSD at a certaincapacity to be able to get a drive four times that size at the same price inthe future.

"SSD prices will stay the same. The capacitieswill just explode," Handy said. "A terabyte might be the smallestenterprise SSD you can buy a year from now."

Predictions vary on the timing and thepricing impact of the potential NAND flash oversupply. At the very least,however, enterprise IT shops that noticed a slowing of flash price declines orsporadically constrained supplies of SSDs during the most recent NAND flashshortage could find changing market conditions in the coming months.

Howard Marks, founder and chief scientist atDeepStorage LLC, expects flash prices to drop in the range of 50% to 60% overthe next two years. But he said the problem with advising enterprise IT pros todelay buying SSDs is that they tend to buy the drives as part of a systempurchase from storage array vendors such as Dell EMC and IBM rather thandirectly from drive manufacturers such as Micron and Toshiba.

Delayed price fall from OEMs

"The price fall from OEMs is going to bedelayed because [vendors are] going to make extra margin until customerpressure makes them reduce the prices," Marks said.

Marks offered the same advice he gives toanyone trying to maximize their bang for the buck: "Delay every purchaseas much as you can. We are in an industry where prices decrease overtime."

David Floyer, CTO and co-founder at Wikibon,said IT pros should buy flash storage when they need it. "If you try anddelay it and then you have bad performance, you've lost your company a lot moremoney than you'd ever saved them by gambling on that," he said.

Floyer doesn't expect steep NAND price dropsin the range of 50% to 80% in the imminent future.

"If you look at the curve, as youintroduce each new generation and get more density, you get a shortage to beginwith, and then there suddenly comes that point when that demand breaks, andthat's the point at which [the price] comes down. And it hasn't for the lastfew times because 3D [NAND flash] is being introduced and [there was] a lot ofslowness in that adoption," Floyer said.

"But when it gets in line that's goingto crash [the market] down; it always does. It comes down and then it goesflat. That will go back to the cycle which DRAM and NAND and all ofthose things go through, and people like Micron were expert at juggling wherethey were," he added.

Handy said the "funny littleuptick" for Micron was the exception to the pattern. He said, in general,the spot price of NAND flash has gone down steadily since late last year,signaling the beginning of the price collapse.

"At the beginning, there will be a hugeprice drop, and then after that, there will be a much more moderate price dropof 30% per year until the next shortage. And then they'll go flat again,"Handy said.

The latest 64-layer 3D NAND flashcosts about 8 cents per GB, whereas 16-nanometer planar NAND stands at 21 centsper GB, according to Handy. The NAND flash shortage happened as manufacturersstruggled with the transition from planar, or two-dimensional, NAND to denser3D NAND.

"The thing that's caused the shortage isthat manufacturing is not as efficient as it's supposed to be. It's gettingthere, and that's why we're getting into this oversupply," Handy said.

Handy predicted flash manufacturers willeither close down their planar NAND fabs or convert them to DRAM,eventually leading to a significant drop in DRAM prices.

"We'll have a NAND collapse. Then we'llhave a subsequent DRAM collapse as NAND capacity is put into the hands of theDRAM guys. They'll have capacity that is not being used efficiently, and theDRAM people will end up converting their capacity to foundry, and there'll be afoundry oversupply," Handy said. "So, the entire semiconductor marketis going to go into an oversupply because the NAND domino fell."

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