Recent years have seen the consolidation of the memory market to three Tier 1 players, Hynix, Micron and Samsung. This consolidation was the result of enormous CAPEX requirements, coupled with a highly volatile commodity, DRAM.
Today’s NAND Flash landscape is broad, compared to DRAM, however possesses the very same traits. Players today include Hynix, Intel, Micron, SanDisk, Samsung and Toshiba. Let there be no confusion, owning the Fab gives these companies a huge leg up in the SSD market.
There are two major components of any SSD’s build of materials, the controller and the NAND flash memory. The higher the SSD’s density, the greater the NAND content, making NAND the primary component in an SSD configuration.
Like DRAM, NAND memory comes in multiple flavors, such as MLC, eMLC and SLC. The Semiconductor companies named above each employ their own proprietary design, performance specifications and manufacturing processes. These suppliers compete against each other, not just in the SSD market, but in the chip market, as the SSD manufacturers who don’t own the Fab have to buy their NAND from one of them.
While the barrier to entry in the solid state “drive” market is minimal, the barrier to entry in the NAND market is measured in billions of dollars. Investing CAPEX measured in the billions of dollars is not for the feint of heart! Further, companies such as Micron and Samsung have huge investments in DRAM Fabs, which may be converted to NAND Fabs at their discretion.
SSD manufacturers must buy their NAND from one of these suppliers. Who do you think has the lower cost basis, the manufacturer or the owner of the Fab? The answer is obvious, and so is the result. Any manufacturer who is competing head-to-head with a Fab owner will have a higher cost of goods, and therefore a price disadvantage.
The good news for SSD manufacturers is that the Semiconductor companies are interested in large volume and little (pre-sales) support, so there remains plenty of market opportunity. The players that own the fab will likely command the “Client” market in SSD, unless the competing manufacturer is willing to conduct business at a (very) low single point margin. Owning the Fab is a huge leg up.
EXAMINING THE SSD INDUSTRY SERIES – LINKED
ABOUT THE AUTHOR
Wayne Eisenberg served as Vice President of Worldwide Sales and Marketing Communications at SMART Modular Technology from April 2002 until his retirement in 2011 and held other sales management roles at SMART since 1995.
Wayne has also held various positions at other high technology companies including Toshiba America CSD, GRiD Systems and Harris Corporation.
He holds a B.A. in Journalism with a minor in Business Administration from California State University at Chico.
Wayne has extensive experience in worldwide sales and international business development, an impressive record of achievement, and has lead sales in all customer segments “ OEM, Channel, and Enterprise “ and, has market and relationship successes in telecom, networking, storage, computing, industrial, and defense/aerospace. Recently, Wayne has accepted the position of OCZ Senior VP Global Sales at OCZ.