SAN JOSE, Calif. – The dynamics of the solid-state state drive market are shifting, and for Abhi Talwalkar it's been a disappointing shift in 2013.
The chief executive of LSI hoped the market for SSD controllers from Sandforce, a startup he purchased in 2011 for $370 million, would grow as much as 35% this year. Instead it grew just 10%.
The growth Talwalkar hoped for went mostly to companies such as Samsung that started selling SSDs using its own NAND flash chips and controllers. Increasingly the relatively small, independent SSD makers Sandforce had been selling some of its controllers to are losing business to vertically integrated giants such as Samsung, Sandisk, and others.
The shift got started in 2011. That's when NAND flash makers cut back capex on fab equipment, believing the memory chip market was in oversupply.
As a result NAND flash prices went up about 20% this year, Talwalkar estimates. At the same time, flash chip makers such as Samsung have been more aggressively making and selling their own SSDs because they represent a more profitable business than chips.
The NAND vendors are winning business because they can make money at lower selling prices than the independents. For example, one of the independents that is a customer for LSI had to walk away from a multi-million dollar deal selling SSDs to a large PC company this year when the prices went below its costs.
"Three years ago the NAND guys had a fairly small share in SSDs and there were perhaps 50 players in SSDs," said Talwalkar in an interview with EE Times.
"I believe in two to four years 70-80% of client SSDs will come from NAND makers and the rest will come from five to 10 independent SSD makers that have unique business models and/or focus on certain verticals markets or distribution models," he predicted, noting Kingston, Avant, and OCZ among the strong survivors today.
"I have no worries about the growth of flash, the question is about in what form it gets deployed" and by whom, Talwalkar added.