Flash Supply Tight & Getting Tighter

Flash is winning a major portion of the storage market, but its success is bringing supply issues.

With the performance boost that flash and solid state drives (SSDs) give to computer systems, the takeup of the new technology has been slower than expected. For that, we can blame the recession and a fear of wear-out issues.

Now, though, production is moving into high gear. Many initial concerns have been put to rest, and demand is taking off.

Driving demand
Both tablet computers and smartphones are using huge volumes of flash chips today. While the phone business is starting to slow, demand remains strong in the sector. Meanwhile, the tablet space is taking off, as tablets supplant PCs. The only major offset is that digital camera sales are dropping, as phones get capabilities exceeding most dedicated camera products.

All of these shifts add up to a rapid increase in demand for flash chips. We are running into supply deficits, and the price reductions of recent years are slowing.

The NOR flash market doesn't get much interest these days, but production of these chips does eat up foundry space. Most of the issues circle around NAND flash, which the new electronics all use. NAND can be segregated into Single Level Cell (SLC), Multiple Level Cell (MLC), and some new technologies.

Today, the bulk of flash and SSD units use MLC. The enterprise-class product space demands SLC devices, which can tolerate many more write operations. The durability is required for write-heavy applications. This market was the slowest to respond to SSD and flash, as the large storage vendors overcame their inertia and recognized both the challenges of the technology and the negative implications to the traditional hard drive side of their business.

MLC's lower durability is adequate for phones and tablets, which are price sensitive. Next year, we'll see the addition of wearable computers, such as the smartwatch, computerized glasses, and the like. These will put further pressure on MLC demand.

Just over the horizon, the Internet-of-Things will create a tsunami of flash demand. Many of the “dumb” electronics in our lives will get smart. From microwaves that read bar codes to fridges that know what food is inside, the domestic scene is changing.

But most environments will evolve fast, too. Touch-screen kiosks will proliferate where anything is sold. All cars will have phone and monitoring capability. The European Union is looking to make those applications mandatory.

All of these trends will add to demand. Electronics OEMs are going to be looking for device manufacturers to step up and deliver more flash.

Creating supply
The supply picture is complicated by a bunch of other factors, too. There are really several distinct chip types, and their uses are differentiated enough that market dynamics vary considerably.

I predict that next year will see a reversal of the inertia of the enterprise-class space as all flash and hybrid appliances take off. The market for high-performance SLC-based SSD is also growing.

SLC drives, compared with MLC flash that can store two bits per cell, are universally expensive, since more chips are used to get the same data. The result is that most enterprise offerings come with slower, but cheaper, MLC versions, easing the pressure on the SLC supply side somewhat.

The supply side is moving forward, but it takes a while to build a foundry. Complicating this is the desire to make denser chips. Samsung is looking at 3D cell stacking, and this is almost a certainty, since the difficulties of making smaller cells with adequate reliability are starting to slow product evolution. The downside of stacking is it adds more process steps for each extra layer, so it impacts supply.

A recent explosion at a Hynix facility is probably just a bump in the road, but even an announcement by Toshiba that it is building more fab facilities looks inadequate to meet growth.

The implications are that demand will outstrip supply, at least over the next two years.

What's an OEM to do?
In the face of high demand and limited capacity, OEMs will need to compromise some when using flash in products. These same trends bode well for deduplication technology as a way to get more from less. Prices will remain relatively flat, and may even increase over the period.

Beyond 2015, the equation will depend on how much more foundry space hits the market. Other denser technologies, such as Resistive RAM may enter the game. However, they face foundry space issues, too, as well as the acceptance process for any new technology, so their impact will likely wait until 2016 and beyond.

18 comments on “Flash Supply Tight & Getting Tighter

  1. Rodney Brown
    September 27, 2013

    If more tablet makers start emulating the top line Surface Pro 2 (512GB SSD, 8GB RAM) how much worse will this situation get? Or will the scarcity keep prices artificially inflated and slow down the move to SSD?

  2. JimOReilly
    September 27, 2013

    I think NAND flash demand is likely to fall short even more. Tablets are taking off faster than expected, and flash/SSD is now the hot solution in storage. I expect presure on prices to increase quite a bit, probably reflected in flat rather than increasing pricing.

    3D flash may bring some relief, but that won't be high volume for at least a year.

  3. Hailey Lynne McKeefry
    September 27, 2013

    @Jim, thanks for this story…it's interesting on two levels to me. First, of course, the obvious: that a shortage of these chips will be at least a blip and perhaps more on many OEMs minds and planning will do some good. I suspect it will get worse before it gets better since consumer electronics users keep wanting more and more memory.

    It also lends itself to a more strategic discussion around the best strategies for managing the parts shortages that come and go. So let us know, dear readers, how does your organization plan for and weather these sorts of storms? Do you think shortages happen more or less than in years past? let us know what trends you see. Examples always welcome!

  4. _hm
    September 28, 2013

    Consumers are very eager to embrace SSD. However, price is high  and availability is low. Once price is reduced nearly by 50%, consumer will gladly start using it.


  5. JimOReilly
    September 28, 2013

    The price isn't an issue anymore!

    We've been trained to think capacities. HDD don't come any smaller than 500GB , so we assume we need that much storage in an SSD. Reality is most users can easily live with just 64GB or 128GB on their system, and those drives are the same price as the cheapest HDD.

    September 28, 2013

    I reckon we will need a step change in packaging and interconnect technology to dramatically change the acceptance of flash.  HDD is still the king for large storage needs.

  7. JimOReilly
    September 28, 2013

    HDD is on its way to just being used as bulk storage. It will be relegated to a lower tier in the storage tree. SSD will replace fast HDD. It isn't an issue of capacity..It's IOPS. On a $/IOPS basis, SSD is much better than HDD.

  8. Hailey Lynne McKeefry
    September 29, 2013

    I had kind of lost track of that in the $$ per MB or GB conversations. It's really true that the average user could make do iwth smaller drives–(I say that tongue in cheap…my first system with a drive gave me a choice of 20MB or 40MB nad I couldn't imagine filling 40MB!!) Is the issue more ignorance do you think?

  9. Hailey Lynne McKeefry
    September 29, 2013

    @Jim and  you answered my question..thanks.

  10. ahdand
    September 29, 2013

    @Hailey: Yes I too think being ignorant is something which makes things worse. Im not sure why we ignore certain factors when we clearly see the importance of it. Not sure whether there is an additional layer above ignorance to control ignorance ? 

  11. JimOReilly
    September 29, 2013

    Hi Hailey. Most users only need a 64GB drive for their notebook or desktop disk. 128GB should work for business use.

    People who download a huge amount might want an external USB hard drive for a terabyte of capacity. (Note the allows portability to other systems)

  12. Hailey Lynne McKeefry
    September 29, 2013

    @Jim, i'm sure you won't be suprised by my saying this… but teh USB hard drives always make me nervous from a corporate security standpoint. These little pocket drives are a huge cause of data leakage in organizations.

  13. JimOReilly
    September 29, 2013

    Business systems should have the USB ports disabled!

  14. Hailey Lynne McKeefry
    September 29, 2013

    @Jim, i'm right there with you. Preach it, brother!

  15. Taimoor Zubar
    September 30, 2013

    @Jim: I think SSD will become the mainstream drive soon but a lot depends on the cost. So far the cost is still pretty high which makes HDD the first choice. Once the cost differential gets lower we shall see many more laptops with SSD being shipped.

  16. Anand
    September 30, 2013

    These little pocket drives are a huge cause of data leakage in organizations.

    @Hailey, I totally agree with you. I think many companies dont allow USB devices inside the office premises because they feel it might compromise the data security.

  17. Anand
    September 30, 2013

    SSD will replace fast HDD.

    @Jim, I think it will take time for SSD's to completely replace HDD. I recently read a garner report which predicted that Solid-State drives will complement, not replace, hard-Disk drives in data centers.

  18. JimOReilly
    September 30, 2013

    I think Gsrtner is correct. HDDs will be used as bulk storage in the data center for a long time to come. Capacities will reach 10TB next year, and maybe 20TB by 2016, but all of the fast drive functions as primary storage are being taken over by flash and SSD.

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