Articles: Storage

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Market Trends

The flash memory production graph only shows one slump, in 2008, over the last decade. Obviously, that’s the consequence of the global financial crisis. But regardless of the crisis, NAND flash has been developing much better than the other types (NOR, DRAM, SRAM), sporting a 40% annual growth throughout the decade (according to Forward Insights):

This rush has been due to manufacturing process improvements. You may know that flash memory chips are now produced on 24 to 27nm process whereas DDR3 SDRAM has only reached 30 nanometers.

When new technologies are introduced at such a tremendous rate, huge investments and high manufacturing costs are unavoidable. While we were pleased with the declining prices of SSDs, there was a negative side to the growth of the NAND flash market as the companies were suffering losses from manufacturing for tens quarters in a row! The crisis had nothing to do with that. The players just wanted to gain their ground on the new market and were ready to put up with temporary losses for the sake of long-term profits in the future. The NAND manufacturing industry became unprofitable in the second quarter of 2007 and only returned back to making profit in the third quarter of 2009. The total loss of the companies, excepting Samsung, was as high as $23.4 billion (according to Samsung’s data):

Samsung doesn’t report its own performance in the diagram and doesn’t reveal the identities of the other companies, but its results wouldn’t change the general trend much. The reduction of the price of flash memory chips (and SSDs) was the outcome of tough competition no company could avoid. In early 2007 the joint venture of Intel and Micron stepped onto the flash memory scene, signaling for others to make haste. The long-time business partners Toshiba and SanDisk began building new factories one by one. Capital investments were really huge.

It is in Q4 2008 that we saw the price of flash-based storage drop the most. That was the quarter when the industry almost came to a halt. For example, Micron stopped its NAND production in Idaho and the rest of the companies followed suit, provoking a shortage of chips and a growth of SSD prices. Fortunately, we’ve got a different situation now. There are new investments into manufacturing in 2010, leading to a new round of technological wars and giving us a promise of affordable SSDs (Gartner’s data):

Before the crisis, the average price of one gigabyte of flash memory had been declining at a rate of over 50% annually (by 64% in 2008, for example). Starting from 2009, this rate is lower at below 40% (Forward Insights’ data):

This year the average price of one gigabyte of NAND flash is a mere 18% lower than in 2009 which has brought us to the same situation as in Q4 2008. However, the price reduction is going to be 38% in the next year, reaching the important level of 1 dollar per gigabyte. Running a little ahead, the dollar-per-gigabyte price is expected in 2012 for SSDs.

The key factors determining the flash memory pricing are the increasing production volumes, the transition to 64-gigabit chips, and the growing share of NAND MLC memory with 3-bit cell. However, the rather low demand for SSDs doesn't help to speed the process up. The low popularity of SSDs is due to both users who don't want to pay much more compared to traditional storage devices and to the manufacturers who should make more promotional effort to tell about the benefits of SSDs and come up with a single standard for evaluating their consumer properties.

For example, the mean-time-between-failures parameter is absolutely uninformative for SSDs because NAND flash has a limited number of erase cycles, and each manufacturer has a different approach to specifying an SSD’s number of allowable rewrite cycles and speed. Fortunately, the JEDEC JC64.8 SSD Endurance and Data Retention Verification Test we will discuss below is going to make it easier to compare the specs of flash-based drives from different makers.

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