YoY Growth of NAND Flash Demand Bits Will Stay Under 30% from 2022 to 2025 as Demand Slows for PC Client SSDs

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Client SSDs constituted a major driver of demand bit growth in the NAND Flash market for the past two years as the effects of the COVID-19 pandemic were spurring procurement activities related to working and studying from home. TrendForce currently projects that the attach rate of client SSDs among notebook computers will reach 92% in 2022 and around 96% in 2023. However, the demand surge related to the pandemic is subsiding, and the recent headwinds in the global economy have caused a demand freeze in the wider consumer electronics market. Hence, among the major application segments of the NAND Flash market, client SSDs are going to experience the most significant demand slowdown. This, in turn, will constrain demand bit growth as well. TrendForce projects that for the period from 2022 to 2025, the YoY growth rate of NAND Flash demand bits will remain below 30%.

The average NAND Flash content of client SSDs has already surpassed 500GB this year. Quotes for 512GB SSDs have fallen sharply and come to a level that is roughly comparable to the quotes that were given for 256GB SSDs half-a-year ago. In fact, quotes for 512GB SSDs are also near the level for HDDs with the same capacity. On the other hand, upgrading to 1TB or higher for notebook SSDs could be challenging for PC OEMs mainly because the licensing fee for the Windows OS has a positive correlation with device specifications. Therefore, an increase in SSD capacity will raise the cost of a whole notebook computer. With PC OEMs being less keen on adopting SSDs that are 1TB or higher, growth in the average NAND Flash content of client SSDs will also be more limited in the future.

Regarding lower-capacity storage solutions for notebook computers, Microsoft is encouraging PC OEMs to adopt UFS solutions for entry-level notebook computers that come with 128GB of storage. There are two reasons behind this development. First, the market for 128GB SSDs are gradually shrinking. Second, compared with SATA, UFS has a price advantage and a comparable performance in terms of data transfer speed. In the long run, UFS solutions could replace low-capacity client SSDs for notebook storage. However, SSDs have experienced a steep price drop recently, so their price difference with UFS solutions has gotten smaller. Furthermore, there are no PC CPU platforms that natively support the faster data transfer speed offered by UFS 3.1. For now, PC OEMs believe there is no need to make the switch since UFS solutions still lack a notable price advantage. Opportunities for adopting UFS solutions will only become more apparent when there is a clear price advantage and native support is available from CPU platforms.

Enterprise SSDs Will Succeed as Major Driver of Demand Bit Growth in Future

The momentum of NAND Flash demand varies for different applications. For instance, demand bit growth has not been as rapid for notebook SSDs as it has been for smartphone storage solutions. This in part has to do with notebook cameras being mainly used for video streaming rather than shooting photos and videos that have a high image quality. TrendForce projects that NAND Flash demand bits related to client SSDs will increase by 4.3% YoY for 2022 and 11.6% YoY for 2023. Turning to the YoY growth rate of the average NAND Flash content of client SSDs, it is projected to reach 18.2% for 2022 and then shrink to 9.6% for 2023. Eventually, enterprise SSDs will take over from client SSDs as a major driver of demand bit growth in the global NAND Flash market.