MARKET REPORT
AUTUMN 2024
The supply of flash memory has stabilised. Supply chains into fab plants are smooth, lead times for product availability are broadly predictable, as are prices. This makes for a relatively stable and secure business situation.
Consumer demand is falling slightly while enterprise demand is growing. Capacities continue to increase, and AI is playing a part in rising demand for both consumer and enterprise memory. New fabs are at early stage development in the US, Germany, Japan, Taiwan and South Korea, with China also planning to expand capability. However, no significant impact on supply is expected for some years.
The consumer market
Consumer demand was very good in the first quarter of 2024, before slowing in the second quarter. We anticipated consumer demand would slow in the third quarter before rebounding towards the end of the year. Original Equipment Manufacturers (OEMs) anticipate some slowdown in the consumer market for smartphones and computers, but at the moment product prices are holding, and so there is no anticipation of prices for flash memory falling.
Furthermore, the Christmas period is often one of significant purchases, with new phone and computer models, and new gadgets and devices hitting the market at a time when people are prepared to spend. The emergence of Artificial Intelligence in smartphones may drive demand in this market segment. So there are no concerns about the consumer side of the flash memory market at the current time.
Above: AI applications are driving demand for enterprise SSDs
The enterprise market
The enterprise market is buoyant. SSD storage continues to be in demand, as both cloud computing and enterprise storage consistently evolve and expand, and SSD is seen as the most reliable, cost efficient high capacity storage medium available. In addition, the enterprise market is embracing AI, and this is further enhancing demand for SSDs.
Overall, the market for SSD is predicted to grow. Indeed Fortune Business Insights says the market is projected to grow from USD 17.79 billion in 2024 to USD 82.22 billion by 2032.
Above: The global supply chain is stable
Supply, lead times and pricing
Fabs have a consistent average lead time of six to eight weeks, suggesting that they have a strong and stable supply chain. While there are still some constraints on capacity, these are not concerning. We do not expect lead times to decrease, supply to fall or grow dramatically, or prices to fall in the immediate future.
Looking at the picture in the round and taking into account consumer and enterprise demand as well as supply, we expect prices to remain at their current level in the short term, with a possible small increase in the last quarter of 2024.
Experience and expectations at Cardwave
We have excellent relationships with our suppliers. The supply chain is generally stable and delivering enough product for Cardwave to meet demand. There have been no notable issues with supply in the year to date. Manufacturers are very supportive of our requests, we are able to obtain and hold inventory in anticipation of customer needs, and so we are able to fulfil orders without issue.
In the wider market, the Internet of Things and embedded space sectors are both strong, and in some cases OEMs are seeking out cheaper products in order to gain competitive advantage. There are risks with this strategy as performance and quality can be compromised. We see part of our role as advising OEMs on the quality / price / performance matrix, and we want to help them optimise all three factors rather than gain on one at the expense of others.
Customer relations remain strong, and we are experiencing steady repeat business as well as enquiries for new business.
In line with the constant and consistent increase in capacity and capability of flash memory media, cards with less than 16GB of storage are now considered legacy, and customer demand for us to provide such cards is falling. At the other end of the spectrum, customer demand for higher capacity flash memory cards is rising, and 128GB microSDXC cards are fast becoming the most popular product we sell. They hit the current market’s sweetspot for providing excellent storage capacity for their price.
Above: Investment in new fabrication plants has increased in recent years
New fabrication plants in development
Progress towards increasing the number and geographical diversity of fabrication plants continues. Thirteen new fabs for semiconductors (which includes memory), are under construction or are being planned.
Not only is this aimed at meeting anticipated growth in demand, the locations of some of these fabs are indicative of a desire of some geographies to reduce their reliance on others. So, we are seeing a fab being progressed in Germany, and three advanced fabs coming forward in the US. Two of these are via Intel, and one via the Taiwanese giant TSMC (Taiwan Semiconductor Manufacturing Company Limited).
The US plants are part of the strategy outlined by the US Government in its US Chip and Science Act (2022), whose aim is to reduce dependency on Asia. This is a long-term plan, and won’t show fruit for some time to come.
Meanwhile, we know of several fabs under construction in Japan, Taiwan and South Korea, also aimed at meeting growth in demand. China is also expanding its own capabilities. Reports vary on the scale of China’s ambition, but we should expect growing market involvement from them, resulting in greater competition and perhaps price reductions. This is unlikely to be apparent in the immediate term, but we may see changes in the next three to five years.
Overall, whatever happens with these initiatives, we are unlikely to feel change on the ground for some years.
Key product and company news
The demerger of SanDisk from Western Digital was announced earlier this year. We have a strong relationship with both brands, and foresee no issues with our business relationship or supply chain as things progress. We do not anticipate any changes to our business in terms of access to stock, fulfilment of customer orders, or our level of customer of service.
We have noted that flash memory capacities continue to rise, and in that light Western Digital has announced an 8TB SDUC UHS-I card, and the world’s first 4TB microSDUC UHS-I card. We don’t expect these to ship in 2024, but both are an indication of how flash memory capacities continue to expand, both to meet current market expectations and help to drive product developers to be more ambitious.
What Cardwave sees today
Outlook
About Cardwave
Cardwave provides consultancy services to help device makers select memory for their products. We help our customers find the right memory, in the right quantity, at the right price. We work with leading suppliers across the globe, have excellent networking links, and strong supply chain routes. We provision, package and ship product globally.
