Rising SSD Costs Could Hurt Demand

Following a series of production cuts and price adjustments last year, the cost of SSDs has subtly increased over time, evidently benefiting NAND flash memory manufacturers financially, with their fiscal health significantly improved compared to the same period last year. Moreover, this upward trend in prices will probably continue.

According to a report by DigiTimes, K.S. Pua, the head of Phison Electronics, issued a caution regarding the recent surge in SSD prices, suggesting that further increases could lead to a decrease in demand. NAND flash memory manufacturers should endeavor to augment production to meet market demand rather than allowing market needs to outstrip supply through reduced production.

After experiencing a significant downturn in the SSD market due to robust demand and supply shortages spurred by the COVID-19 pandemic—a decline that surpassed manufacturers’ expectations—the supply vastly exceeded actual demand at the time. Coupled with prolonged periods of high inventory levels, NAND flash memory manufacturers were compelled to significantly lower their prices. At that time, K.S. Pua stated that further reductions in NAND flash prices were unlikely, warning that if the market did not recover promptly, some suppliers might face bankruptcy.

With market demand picking up again in the last quarter of the previous year, combined with the manufacturers’ strategy of reducing production, SSD prices began to climb, registering a notable increase in a relatively short period. Phison Electronics now harbors concerns that if the prices of storage devices—a fundamental component in building PCs—become excessively high in the context of a sluggish global economy, it could disrupt the recovery pace of the PC market, potentially leading to a contraction in demand once more and ultimately impeding the development of the NAND flash industry.