What lies ahead for the Solid-State Drives (SSDs) market?
By Diego Alfaro, Ph.D., Technology & Market Analyst and Simone Bertolazzi, Ph.D., Senior Technology & Market Analyst for the Semiconductor & Software Division, Yole Intelligence.
Solid-State Drives (SSDs) have represented a revolution in storage technologies in recent years. They are a very sound alternative to Hard-Disk Drives (HDDs), with lower latency, better reliability in certain use cases, and immunity from mechanical vibration. Their use in computing architectures has propelled storage technology to new frontiers, with improved performance revolutionising data access.
Non-Volatile Memory Express (NVMe) is a communication protocol for transporting data stored in NAND flash that runs on the PCIe interface. It was the first protocol specifically designed to exploit NAND capabilities. With each PCIe generation, capacities per drive have been increased while reducing SSD latency. It has led to higher selling prices per drive while enabling market growth.
After some delays, 2024 will be the year for the technology transition ramp-up from PCIe 4.0 to PCIe 5.0 to occur. With speeds potentially doubling, applications requiring rapid data access, such as high-performance computing, artificial intelligence (AI), machine learning (ML), and gaming, will be the first to leverage the technology.
In general, the deployment of PCIe 5.0 SSDs has been lower than expected. In the case of enterprise SSDs, the most eager market segment for the new drives, the considerable delays that troubled Intel’s Sapphire Rapids products affected the demand, along with economic uncertainties. Intel’s new products were finally launched in early 2023 and joined Genoa’s AMD (available since November 2022) as the server CPUs leveraging the PCIe 5.0 interface. After the qualification stages, server systems, including such CPUs, are expected to be shipped in large volumes from Q3-2023.
According to Yole Intelligence’s latest study, Solid-State Drives 2023 report, by 2028, we estimate that PCIe 5.0 SSDs will make up 69% of the enterprise SSDs units shipped compared to 2% in 2023, for a CAGR23-28 of 79%.
In 2023, SSD market revenues are decreasing. They are expected to be $19 billion, equivalent to a decrease of ~32% y/y ($28 billion in 2022). The market contraction is due to global inflation, geopolitical tensions, and oversupply. However, in the long term, the potential is bright. Nevertheless, the dynamics will differ for client and enterprise SSDs with CAGRs23-28 of 17% and 35%, respectively. Although client SSDs are replacing client Hard-Disk Drives (HDDs) – particularly for laptop PCs – thanks to their improved performance, they will present a lower growth compared to enterprise SSDs mainly due to:
1. Overall weak consumer demand with the PC Total Addressable Market (TAM) volume remaining at 250-280 million units per year
2. A saturated market with few growth opportunities
3. Some client computing workloads moving to the Edge or the Cloud
On the other hand, enterprise SSDs will increase their market share from 56% in 2023 to 73% by 2028. Increasingly demanding workloads for data centre applications (e.g., Cloud computing, artificial intelligence, real-time analytics) drive the need for faster data processing and storage units. Compared to HDDs, SSDs will be the default choice for such applications, leveraging the higher bandwidths and lower latencies enabled by the latest PCIe interfaces.
The SSD controllers market dynamics are strongly correlated to client SSDs unit sales. This is justified by the fact that, in terms of volume, the units shipped for such a market segment are ~5x higher than their enterprise counterpart with a less pronounced ratio for the Average Selling Prices (ASPs). By 2028, the ratio will be reduced to ~3x. In the coming years, leading controller manufacturers (Silicon Motion, Samsung, Phison…) will orient their R&D efforts towards leading-edge enterprise SSD controllers since their performances progress will be much faster than client ones, enabling higher added-value offerings, and therefore, higher ASPs.
In summary, despite negative dynamics for 2022 and 2023, the SSD market is expected to reach $63 billion by 2028 (CAGR23-28 ~28%), with PCIe 5.0 and data centre applications playing a key role to drive the growth. The SSD controllers’ market will grow with a CAGR 23-28 of 5% from $1.6 billion to $2.1 billion.