With the continued expansion of major hyperscale data centers and a stabilization in PC sales, demand for key storage devices “ both HDDs and SSDs “ drove a new record for capacity shipped in 2018. The number of exabytes sold increased 21.4% from the prior year to 912 exabytes. Combined revenue eased to $46.18 billion due primarily to a rapid contraction in SSD prices.
Despite late-year fluctuations in both enterprise SSD and high-capacity HDD markets, the data storage industry grew solidly in 2018, stated Mark Geenen, President of TRENDFOCUS, a market analysis firm specializing in data storage. Revenue was a different story. While HDD price declines remained rational across nearly all applications, SSD prices went from record highs early in the year to a state of collapse by year-end due to an oversupply of NAND. And, unfortunately, we do not see a significant change in the pricing and demand dynamics until sometime in the 2nd half of 2019, added Geenen.
The evolution of the HDD industry continued in 2018, with gains seen in cloud and data center applications, as well as in video surveillance. HDD capacity shipped topped 800 exabytes, fueled by stunning growth in capacity enterprise (also known as nearline) HDDs bound for cloud and data center applications. Revenue grew less than 1% as industry unit shipments to PCs continued to decline.
In 2019, client HDD demand will remain under pressure with accelerating SSD attach rates from falling NAND pricing cutting PC demand for the legacy storage technology. On the other hand, the current weakness in capacity-intensive cloud requirements for HDDs should begin to recover by mid-year, with the qualification and ramp of 14 TB HDDs driving the next wave of hyperscale growth.
SSD exabytes sold skyrocketed over 45% in 2018, as sales to both client PCs and enterprise/cloud segments enjoyed healthy growth. But SSD revenue declined marginally as the supply sufficiency metric flipped from undersupply to oversupply in a matter of months. NAND oversupply in the later parts 2018 resulted in dramatic price reductions in all SSD market segments, stated Don Jeanette, Vice President and lead analyst for TRENDFOCUS SSD research. That wiped out all revenue growth experienced by the SSD market from mid-2017 through the summer of 2018.
Demand for NAND flash continues to grow, and the falling prices will drive elasticity of demand in 2019, especially in client markets. Steps taken by NAND suppliers to control wafer starts this year to realign supply growth with current market demand dynamics may drive re-stabilization later in the year, especially if the expected resumption of cloud growth for capacity HDD demand also coincides with an upward inflection of higher capacity of SSD storage.