NAND Shortage Alert: Are Dirt Cheap SSDs in Peril?

NAND shortage effects

Over the past year, SSD costs have decreased significantly, with many 1TB SSDs currently being less expensive than 1TB HDDs. But a Digitimes story claims that controller manufacturer Phison is implying that there could soon be a shortage of the raw materials required to create NAND chips, implying that the days of low-cost memory may be drawing to an end.

Prepaying its chip vendors to guarantee it has a enough supply of NAND chips, Phison, a manufacturer of memory controllers for SSDs (including a majority of PCIe 5.0 SSDs), is taking precautions against an impending shortage. The prepayment alone will probably increase the price of NAND chips, and a scarcity would undoubtedly lead to a sharp increase in SSD costs in the future.

Since the COVID-19 epidemic, the SSD industry has suffered a decline in demand; yet, in 2023, SSD prices may have dropped at the fastest rate ever. Price reductions were the only practical option to increase demand because production had just been far above it for too long. In an effort to lower supply, manufacturers have likewise begun lowering their output; however, a potential material scarcity might lead to even more supply restrictions.

However, the impacts of businesses cutting back on output and clearing out inventories are already apparent, even without taking into account any possible shortfall. SSD costs have been stabilizing and have even started to rise somewhat . Many SSDs that gained popularity due to their low cost such as Solidigm’s P41 Plus 1TB are now hard to come by, let alone at the extremely low prices observed in recent months.

But, it’s excellent news for the manufacturers, who have been losing money due to the excess supply. Phison issued a warning in May that since the biggest manufacturers have suffered billion-dollar losses, low NAND pricing might lead to bankruptcy. However, the NAND crisis appears to be ending since prices are rising due to a shortage of supply (as well as perhaps rising demand, according to Phison).

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