TrendForce’s latest report sheds light on the dynamics of the enterprise Solid State Drive (SSD) market in the final quarter of 2023.
While witnessing a year-on-year decline in total NAND Flash purchase bits, a promising trend of quarterly recovery emerges. Notably, this resurgence finds significant traction within the Chinese e-commerce sector, where businesses are ramping up inventory ahead of year-end promotional events.
The uptick in enterprise SSD purchases by server Original Equipment Manufacturers (OEMs) during 4Q23 is a direct result of the ongoing reduction of inventories by Cloud Service Providers (CSPs). Despite a decline in enterprise SSD contract prices through Q3, purchasing demand has surged by 10 percent, elevating revenue to an impressive US$1.56 billion, marking a 4.2 percent increase quarter-on-quarter (QoQ).
Anticipating a rebound in quarterly contract prices in Q4, suppliers are implementing production cuts, setting the stage for a potential over 20 percent QoQ revenue surge for enterprise SSDs. This surge is further fueled by a surge in rush orders from server clients, tightening supply, and escalating prices.
Samsung’s enterprise SSD revenue grew to US$590 million in Q3, breaking a streak of four consecutive quarters of decline. SK Group (SK hynix & Solidigm) and Micron also experienced positive growth in enterprise SSD revenue, benefitting from increased shipments and strategic focuses.
While the market showcases promising growth potential, challenges persist for some players. Kioxia faces obstacles in increasing supply flexibility and optimizing profitability due to the continued use of lower-layer technology amidst the industry shift to higher-layer technologies. WDC witnessed a decline in enterprise SSD sales, attributed to conservative purchasing strategies by North American CSP clients and limitations in R&D resources amid corporate restructuring.
Despite the current economic slowdown impacting corporate spending and consequently enterprise SSD demand, a gradual recovery is anticipated in 2024. The expected increase in server shipments and decreasing spot inventory in the market are set to drive QoQ growth in enterprise SSD orders. Moreover, the adoption rate of PCIe 5.0 products is poised to rise alongside new platform rollouts, with Samsung anticipated to lead in revenue performance growth among suppliers due to its early mass production in this interface.
