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North American customers are increasing their orders for storage products as energy efficiency becomes a key priority for AI inference servers. This, in turn, is driving up demand for QLC enterprise SSDs. Currently, only Solidigm and Samsung have certified QLC products, with Solidigm actively promoting its QLC products and standing to benefit the most from this surge in demand. TrendForce predicts shipments of QLC enterprise SSD bits to reach 30 exabytes in 2024—increasing fourfold in volume from 2023.
TrendForce identifies two main reasons for the increasing use of QLC SSDs in AI applications: the products' fast read speeds and TCO advantages. AI inference servers primarily perform read operations, which occur less frequently than the data writing required by AI training servers. In comparison to HDDs, QLC enterprise SSDs offer superior read speeds and have capacities that have expanded up to 64 TB.
Additionally, while mainstream HDDs used in general-purpose servers typically offer capacities of 20 to 24 TB, a single 64 TB QLC enterprise SSD not only consumes less power but also requires less space for storage capacity, significantly reducing TCO. As AI training becomes a high-energy-consuming application, energy efficiency is increasingly prioritized in storage products, making high-capacity QLC enterprise SSDs a sought-after solution for major AI clients.
Few QLC SSD suppliers remain as enterprise SSD contract prices expected to rise through Q3
TrendForce reports that in 4Q23, Samsung held over 40% of the market share in the enterprise SSD sector, while Solidigm, a long-time player in QLC enterprise SSDs, held a combined market share (SK Group) of 32%. Other suppliers, with market shares below 10%, see limited growth potential. Due to rising QLC orders, Solidigm plans to expand its production of 144-layer devices in 2H24. Samsung, which focuses on 176-layer devices and faces no significant competitors, is benefiting from the tight supply of high-capacity QLC products. This is expected to drive enterprise SSD contract prices up through the third quarter, with an estimated quarterly increase of 5% to 10%.
Consumer demand slumps with NAND Flash wafer prices showing signs of weakness
Observations of other end-user demand indicate that NAND Flash inventories for PC and smartphone customers continue to rise. ASP for products like client SSDs, eMMC, and UFS have rebounded more than 60% from their lows in the short term. However, with demand lagging, further price increases are expected to slow. Module makers are reducing inventory by selling NAND Flash wafers on the spot market at below-contract prices, further pressuring prices. TrendForce believes that as NAND Flash suppliers plan to increase production capacity utilization in 2H24, it will be challenging to raise quarterly contract prices for consumer-grade products, leading to weaker performance in NAND Flash quarterly contract prices compared to enterprise SSDs.
