It has definitely been a wild ride over the past four quarters when it comes to SSD pricing…. And, unfortunately for system OEMs and hyperscale companies, this trend of increasing prices doesn’t look like there will be any relief until later this year, and likely in early 2018.
For SSDs, we have seen an increase in pricing of over 36% in some places. And yet at the same time, SSD shipments continue to rise! We did see some slight easing of notebook PC attach rates due to these price hikes, but only a couple percentage points less versus original expectations. Now, with these price increases already continuing into 2017, the expectation of SSDs penetrating more into the mid-range notebook systems, as well as PCIe taking more share of the SATA SSD space has been eased a bit. Pricing deltas have not only maintained between SATA and PCIe, but an increased delta (PCIe costing more) is now being realized. Higher prices to system OEMs translates to higher prices to end customers, which most likely translates to lower system sales. Don’t get me wrong, SSDs continues to cut into the HDD-based notebook market, but how aggressive and for what interface is definitely being tempered a bit.
As we wrote in our last blog, the increased demand for NAND (and higher pricing) will continue through 2017. If 3D NAND ramps in time to make system OEM quals for back-to-school notebook sales, we could potentially see some easing of prices. If they do not make this window, then it will be business as usual for SSD vendors for all of 2017 – higher prices, higher margins, and healthy financials. But don’t fret, we are all pretty sure the normal (crazy) pricing behavior will be return sometime in 2018 – and quarterly takedowns for SSDs will once again, ride a slippery, steep, downhill slope.