SSD Price Surge Fuels Recovery for Samsung & SK Hynix

Over the past year, the strategy of reducing production by memory suppliers has proven effective, leading to a rebound in the prices of storage products. Reports from last month indicate that the prices of DRAM and NAND flash memory are expected to continue their growth trend in the second quarter of 2024, with NAND flash showing particular strength, as contract prices are projected to rise by approximately 13-18%. Western Digital has already issued an official customer letter informing its partners of an upcoming price increase for NAND flash and HDD products.

According to Business Korea, Samsung, and SK Hynix are poised to benefit from the continued price rise of SSD products, with the NAND flash business expected to return to profitability in the first quarter of 2024, ending a streak of losses. A report from TrendForce released last month for the fourth quarter of 2023 shows Samsung as the leading vendor with a market share of 36.6%, followed by SK Hynix at 21.6%, and Western Digital at 14.5%.

What is also noteworthy is the ongoing rise in HDD prices. Although HDDs are slower, generate more heat, and are noisier compared to SSDs, they are cheaper at the same storage capacity and allow easier data recovery in the event of a failure, making them more popular in certain market segments. The rise in HDD prices underscores the close relationship between the price increase of storage products and the entire downstream supply chain, reflecting the burgeoning development of artificial intelligence (AI), which affects the supply-demand dynamics beyond merely compute-related chips.

Compared to the speed of recovery in the DRAM business, the rebound of NAND flash operations for giants like Samsung and SK Hynix has been slower. Both powerhouses hope to expedite the return of their entire memory business to profitability by raising the prices of SSD products, aiming to make a more substantial contribution to their revenue streams.