Enterprise SSD prices are in for a drop

A buildup of inventory has led to an oversupply of NAND flash, which translates to price drops for solid-state drives (SSD).

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CPU prices may be headed north, but thanks to an oversupply of NAND flash, SSD prices across the board are declining.

The cause is an oversupply combined with the threat of a recession, according to Taiwanese market research firm TrendForce. The firm said a combination of slowing demand across all segments of the NAND memory business, along with a reluctance to invest in additional capacity, has led to the glut.

As a result, TrendForce predicts consumer product prices will decline 8% to 13% in the third quarter of 2022, while enterprise SSDs will drop 5% to 10% in Q3, and the trend may continue into the fourth quarter if demand doesn’t improve.

The economy is impacting server brands’ shipments of whole devices and curtailing enterprise SSD purchases, according to TrendForce.

“Corporate order volume continues to decline, simultaneously affecting the purchasing momentum of enterprise SSDs in 3Q22. Secondly, orders from cloud service providers in China were weak in 3Q22 and demand driven by shipments of next-generation server platforms failed to meet expectations,” the analysts said in a statement.

NAND flash isn’t the only memory segment taking a hit.

Last month, TrendForce predicted regular DRAM prices will fall 3% to 8% percent in the third quarter. The reason for the decline is different from NAND flash, however. There has been talk of a slowdown in PC and smartphone sales, and there’s also a transition from DDR4 to DDR5 memory. With new chips coming to market from Intel and AMD that utilize DDR5, there’s been a slowdown in DDR4 sales. The slowdown will continue as the transition goes on, which will be for a few years.

TrendForce notes that the slowdown is especially pronounced on the consumer side, and that memory makers will shift to making enterprise memory. So server DRAM prices may not fall at all, or they could fall as much as 5% in the third quarter, the company predicts.

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