We’ve heard a lot recently about the rapid changes in NAND technology that have been driving down the cost per gigabyte and increasing the storage capacity of Solid State Drives, but these transitions are having an impact on NAND supply which has led to some shortages of popular size SSDs and some price increases on tier two brands. Typically when people hear mention of the words "shortage" and "NAND" they instinctively think back to the early days of solid state drives when supply was truly difficult, if not impossible, to find. But in this case we are talking about a situation that is far more manageable but does require resellers that are heavily vested in SSD to pay close attention to the market in order to properly navigate the situation. In order to do this it is helpful to understand what is causing the shortage, and to try to estimate how long it will last.
In terms of the shortage in NAND - that is being influenced by several factors. First, the overall supply is being impacted by the transition to 3D NAND. As manufacturers like Intel, Samsung, Micron and Hynix convert their factories to 3D NAND they are taking previous production capacity off line to retool the factories. While the long term benefits of lower cost per gigabyte and increased storage capacity resulting from 3D NAND will benefit the growth of SSDs, the short term impact of less capacity is helping contribute to the supply shortage. Second, cell phone makers such as Apple who are getting ready to release new smart phones are consuming supply as they increase the storage on their new phones so this is pushing demand higher for NAND. Last, the market growth for solid state drives is not declining and is only expected to increase as SSDs continue to be deployed in data centers and notebooks, as well as make inroads into client PCs particularly for mainstream desktops. All of these factors of less manufacturing capacity and increased demand are creating the shortage for NAND.
The next question is how long will the NAND shortage last and what will be the impact to mid-term SSD supply. This is always the million dollar question and the most difficult to answer. We don’t think we will see shortages like we have in the past but we are already witnessing some constraints on certain capacity stand-alone SSD drives such as 120GB and 240GB. This does not mean that all drives in these capacities are unavailable but it does mean that resellers may need to wait longer to get the drive of their choice or look for higher-end drives with more features as manufacturers place a priority on these higher ASP drives. In terms of the duration of the shortage, most manufacturers are saying the situation will last at least until the beginning of Q4 but others have predicted there could be a shortage until early Q1 2017. Channel resellers are leveraging the value and benefits of SSD, the most particularly in certain verticals such as education, data center storage, surveillance, digital signage and small form factor systems, as well as in the area of PC upgrades through HDD replacement. So even though the full impact of the NAND shortage may not have arrived just yet, it is important for resellers to watch this market closely for changes in supply and work internally to monitor demand based on existing as well as potential orders.