Solid state drives held back by high NAND prices

NAND flash memory prices are expected to drop to $1 per gigabyte at the end of the year, which some believe may help resuscitate the struggling Solid State Drive (SSD) market, while research group iSuppli believes it is too little too late.

iSuppli forecasts that prices for 1GB of 3-bit per cell NAND flash memory will average at $1.20 for the entire fourth quarter of 2010, but will then drop to an even dollar at the very end of the year. This is a significant drop from the first quarter of 2010, which saw prices average at $1.80 for 3-bit per cell memory and $2.05 for 2-bit per cell.

This will be the first time in two years that NAND prices have fallen to or below the $1 threshold. In the fourth quarter of 2008 2-bit per cell prices average at $0.90, but prices inflated considerably during the recession.

“When NAND pricing first fell below the $1 level at the end of 2008, many observers opined that its would sound the starting gun for solid state storage, allowing the technology to be cost competitive with Hard Disk Drives (HDDs) in PCs for the first time,” said Michael Yang, senior analyst for memory and storage at iSuppli. “However, during the following quarters, pricing rose because of strong demand and constrained production capacity, limiting the appeal of SSDs to low-volume servers in data centers and preventing widespread adoption in high-volume business and consumer PCs.”

Many in the industry believe that a $1 per GB NAND price will fuel substantial adoption of SSDs, but Yang is not one of them. He said that while there will be “a lot of new buzz” in the SSD market towards the end of the year, but HDDs have gained considerable ground over the last few years in terms of capacity and falling prices. He said that there is a risk that SSDs will never regain any real competitive standing.

Yang believes that if SSDs are to successfully compete against HDDs, per GB prices will need to drop to $0.40 by 2012, which would make a 100GB SSD cost around $50, a much more reasonable cost than current models.

It is not certain if prices will drop as low as that, however, as DRAMeXChange has today reported that NAND prices have been fluctuating for the first half of August, meaning that they could potentially go up as well as down.