SK hynix to expand SSD production: AI server demand pushes enterprise SSD prices up 80%

The surge in enterprise SSD prices by over 80% is being driven by a spike in orders for AI servers, with SK hynix and its subsidiary Solidigm, ramping up NAND flash production.

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The AI boom has been here for a while now, which started being fueled by HBM memory chip demand, and is now pushing the enterprise SSD market upwards, too. The volume of data stored on AI servers is rising exponentially, with companies scrambling to secure high-capacity SSDs, with Chosun reporting that "some even paying above-average prices to ensure supply".

SK hynix and Solidigm are responding to the market demand of enterprise-class SSDs by prioritizing scaling up production of high-capacity SSDs using quad-level-call (QLC) technology, which is tailored specifically for enterprise use.

According to industry insiders of Chosun, SK hynix has been gradually increasing wafter input at its M15 production fab in Cheongju, with a goal of boosting monthly wafer output by around 10% by early 2025. In the meantime, Solidigm has been enjoying the sudden surge in demand for SSDs, pulling a profit in Q2 2024 with plans to boost production by around 5% by early 2025.

QLC-based large-capacity SSDs are all the rage in the server industry, as QLC technology stores 4 bits of data per cell, which is one more than TLC which only stores 3 bits of data per cell. This allows more information to be stored per unit area, reduces power consumption, and offers faster read and write speeds. This makes QLC perfect for ultra-high-capacity enterprise-class SSDs.

The only two storage-related companies that produce QLC-based large-capacity SSDs are Solidigm and Samsung, with Solidigm the leader in the market with a 60TB QLC enterprise SSD, with Chosun reporting an industry expert noted that Solidigm's QLC-based SSDs are "optimized for ultra-high-capacity server storage and have advantages over competitors in areas like controller compatibility. Demand has signifcantly exceeded supply since the second quarter".

SK hynix has plans to solidify (pun intended) itself in the market by mass-producing next-generation products, with storage capacity expanded to 128TB, following the release of the 60TB QLC models in early 2025.

SK hynix's NAND marketing director said during the company's recent Q2 2024 earnings call: "Last year, we minimized investments in NAND flash, and we are gradually increasing production this year after output reductions. We are focusing on areas with rising demand. We expect enterprise SSD product sales to account for nearly half of our total NAND revenue, and we aim to solidify our position as one of the top two players in the rapidly growing enterprise SSD market".