The Flash Memory Summit at the end of August highlighted just how far flash-based memory has come compared with the spinning hard drive. We saw announcements of 60 TB and 100 Tb solid state drive (SSD) products, likely to be delivered in the first part of 2017, while performance levels of 10 gigabytes per second on a single drive will be available soon. Hard disk drives (HDD) have been left in the dust!
One analyst asked me, "Why, with all the advantages of SSD, do we not see a total replacement of hard drives?" That's an excellent question. One might argue that supply and demand drive that. However, it's only part of the story.
The traditional large OEMs for servers and storage systems mark up SSDs disproportionately higher than hard drives, leading to the appearance of a large price gap. They are able to do this because of proprietary hooks in their systems that require drives to be purchased from the system maker. This lock-in has really slowed SSD demand, but the inexorable growth in SSD's already large feature lead is now overcoming this.
We are now seeing a migration from locked-in systems to more open hardware, where the drive purchase model will move more towards distribution. At the same time, data integrity and system uptime are moving rapidly away from the traditional redundant array of independent disks (RAID) approach with "enterprise" drives and dual-port interfaces, etc. to use of consumer class drives.
This means a fall in SSD pricing at the end-user level, in part due to the changing drive model mix, in the server and storage system space, which is the largest consumer of NAND flash. This will lead to a demand increase for server/storage products. At the same time, hard drives in PCs are being phased down in favor of flash, with the (flash-based) tablet and smartphone business eroding the PC Market, so adding to flash die demand.
Net this out and demand is increasing rapidly for flash product. More and more, then, the ability of the industry to deliver flash die will be balanced against pricing acting as a break on total replacement. While the HDD makers are deprecating the idea that their spinning drives will go away, and even have talked about demand rebounds, the question now for the industry is not if, but when HDDs are effectively replaced in new sales.
From a supply-chain perspective, the question is focused on the supply of flash die, and the capacity each die stores. Almost all of the action in the die foundry space is in China. The PRC has a strategic goal to achieve chip self-sufficiency, both for its own growing demand and for systems and phones sold to foreign markets. They have a quite a way to go. Today, only 15% of the chips they use are homegrown.
China is determined to change that situation. They aim for 40% of chips to be fabbed in China by 2020. Incentive plans and liberal funding, such as China' National Semiconductor Industry Investment Fund (known as the Big Fund), to build fabs have encouraged a spurt of growth. XMC, for example, has broken ground on one of the largest fabs, due to come on-stream in early 2018 and targeting 3D NAND production with 300mm wafers.