Semiconductors: A solid future in SSDs :: Macquarie Research

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Semiconductors: A solid future in SSDs
Event
 We provide an analysis of the positive growth outlook for NAND flash solidstate
drives (SSDs) and NAND flash storage in general.
Impact
 SSDs will not kill off HDDs: We expect the cost/bit downtrend for NAND
flash to track that of HDDs (~30%/yr) until CY15. Thus the cost/bit gap of 10-
20x between NAND flash and HDDs is unlikely to be closed in the foreseeable
future. HDDs are likely to remain standard for low-cost, high-capacity storage,
with still a lot of headroom for areal density increases. We believe the SSD
market may grow from US$2.5bn in CY10 to US$7.0-7.5bn by CY15, and will
remain smaller than the HDD market, which may grow from US$33bn in CY10
to US$40bn+ in CY15, according to Macquarie’s George Chang.

 But NAND flash demand will still see strong growth in CY11-13 as its
advantages are harnessed: It is wrong to compare NAND flash SSDs and
HDDs solely on the cost/bit metric. NAND flash storage is more expensive, but
has important advantages over HDDs. It is more compact, is much faster (has low
latency), is mechanically reliable, and consumes much less power. It is thus ideal
for mobile, battery-powered devices like smartphones, tablets and ultra-thin
notebook PCs, as well as high-performance PCs. We believe NAND flash storage
would be a perfect complement to a new generation of power-efficient products
that might emerge e.g. from Intel's FinFET technology announced on 4 May.
 NAND flash SSDs will also be deployed in enterprise (server) storage.
Enterprise storage systems come in many flavours. The highest performance
needs are met by significant arrays of HDDs working in parallel in storage
area networks (SANs), but at much cost and with great inefficiency in power
use. There is now the potential of supplementing or replacing these systems
with NAND flash SSDs. Fusion-io claims that just one of their ioDRIVEs can
replace hundreds of enterprise-class HDDs plus the supporting power, heat
removal and network infrastructure. Similarly, STEC claims that their
ZEUSIOPS drive can replace two hundred 15,000 RPM HDDs. Deployment of
NAND flash SSDs may boost the power and capex efficiency of data centres.
 NAND flash storage will also be adopted as a complement to HDDs, as a
fast memory cache in "hybrid" hard drives or as an external cache interfaced
to the PC motherboard. CY11 may prove to be a watershed year for the
NAND flash cache application, due to Intel's imminent launch of the Z68
chipset (11 May). This contains "Smart Response Technology", which can
turn an SSD (say Intel’s potential 20GByte "Larsen Creek" unit) into a cache
for the HDD to provide for snappier PC performance and faster boot times.
Outlook
 We are positive on the outlook for NAND flash producers like Samsung,
Toshiba and Hynix. We see strong structural demand drivers that will make
the NAND flash market one of the fastest growing in semiconductors. We
forecast 16% revenue CAGR to CY15 (to >US$46bn). Toshiba (+Sandisk)
was the largest producer of NAND flash in CY10, followed by Samsung.
Samsung and Toshiba were also ranked first and third in CY10 in SSD market
share. If resistive RAM based on memristors is successfully developed, this
could be a disruptive challenge, but this is unlikely for several years.