AI Demand Fuels QLC Enterprise SSD Shipments, Driving Rapid Growth by 2024

The demand for high-capacity QLC enterprise SSDs is on the rise due to their energy efficiency and fast read speeds, with Solidigm and Samsung being the top suppliers and expected to benefit from the surge in demand. However, on the consumer side, there is a slump in demand and prices are expected to slow down due to excess inventory.

Increased demand for QLC enterprise SSDs due to energy efficiency becoming a top priority for AI inference servers
Predicted fourfold increase in shipments of QLC enterprise SSD bits by 2024
Superior read speeds and larger capacities compared to HDDs, resulting in significant TCO reduction

The demand for storage products in North America is on the rise as energy efficiency becomes a top priority for AI inference servers. This increased demand is driving up the need for QLC enterprise SSDs, with Solidigm and Samsung currently being the only certified suppliers. Solidigm, in particular, stands to benefit the most from this surge in demand as it actively promotes its QLC products.

According to TrendForce, shipments of QLC enterprise SSD bits are predicted to reach 30 exabytes in 2024, a fourfold increase from 2023. The growing use of QLC SSDs in AI applications can be attributed to their fast read speeds and total cost of ownership (TCO) advantages. AI inference servers primarily perform read operations, and QLC enterprise SSDs offer superior read speeds compared to HDDs. These SSDs also have larger capacities, with some reaching up to 64 TB. In comparison, mainstream HDDs used in general-purpose servers typically offer capacities of 20 to 24 TB. Not only do QLC enterprise SSDs consume less power, but they also require less storage space, resulting in significant TCO reduction.

As AI training becomes more energy-consuming, energy efficiency is increasingly prioritized in storage products. This makes high-capacity QLC enterprise SSDs a highly sought-after solution for major AI clients.

In terms of market share, Samsung currently holds over 40% of the enterprise SSD sector, while Solidigm commands a combined market share of 32% through its parent company SK Group. Other suppliers have market shares below 10% and see limited growth potential. Solidigm plans to expand its production of 144-layer devices in the second half of 2024 to meet the rising demand for QLC products. Meanwhile, Samsung, with its focus on 176-layer devices and no significant competitors, benefits from the tight supply of high-capacity QLC products. This is expected to drive enterprise SSD contract prices up by 5% to 10% through the third quarter.

On the consumer side, there is a slump in demand as NAND Flash inventories for PC and smartphone customers continue to rise. Prices for products like client SSDs, eMMC, and UFS have rebounded more than 60% from their lows in the short term. However, with demand lagging behind, further price increases are expected to slow down. Module makers are trying to reduce their inventory by selling NAND Flash wafers on the spot market at prices below the contracted rates, which puts additional pressure on prices.

TrendForce predicts that as NAND Flash suppliers plan to increase production capacity utilization in the second half of 2024, it will be challenging to raise quarterly contract prices for consumer-grade products. As a result, NAND Flash quarterly contract prices are expected to have weaker performance compared to enterprise SSDs.

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Background Information

About Samsung:

Samsung, a South Korean multinational conglomerate, has established itself as a global leader in various industries, including electronics, technology, and more. Founded in 1938, Samsung's influence spans from smartphones and consumer electronics to semiconductors and home appliances. With a commitment to innovation, Samsung has contributed products like the Galaxy series of smartphones, QLED TVs, and SSDs that have revolutionized the way we live and work.

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Technology Explained

NAND: NAND technology is a type of non-volatile memory that is used in many computer applications. It is a type of flash memory that is used to store data in a non-volatile manner, meaning that the data is not lost when the power is turned off. NAND technology is used in many computer applications, such as solid-state drives, USB flash drives, digital cameras, and memory cards. It is also used in many embedded systems, such as cell phones, tablets, and other consumer electronics. NAND technology is a reliable and cost-effective way to store data, making it a popular choice for many computer applications.

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SSD: A Solid State Drive (SSD) is a modern data storage device that employs flash memory technology to store data electronically. Unlike traditional hard disk drives (HDDs), SSDs have no moving parts, resulting in significantly faster read and write speeds. This leads to quicker boot times, faster application loading, and smoother overall system performance. SSDs are known for their durability, shock resistance, and energy efficiency, making them ideal for laptops, ultrabooks, and other portable devices. They come in various form factors, including 2.5-inch, M.2, and PCIe cards, and are favored for their reliability, quiet operation, and reduced heat generation