Report: Price hikes killing SSD sales for laptops

Surging prices for NAND flash memory have hurt what was a promising market for solid-state disk (SSD) drives in laptops this year, according to market research by iSupply Corp.

In a report on whether rising flash component prices are curbing SSD adoption, iSuppli said the price of a 16Gbit multi-level cell (MLC) NAND flash memory chip rose to $4.10 in the second quarter of this year, representing a $1.80 (or 127%) price increase from the final quarter of 2008.

About this time last year, MLC flash memory -- the type used in consumer SSD drives -- was at the bottom of a pricing trough and chips were selling for about $2.60. According to In-Stat, up until the beginning of this year, SSD prices had been dropping 60% year over year. The price plummet, however, hurt chip manufacturers' profits.

According to Michael Yang, senior analyst for mobile and emerging memories at iSuppli, in order to return to profitability, NAND flash suppliers in 2008 cut capacity to reflect weak market demand. This caused prices to rise even as sales continued to be weak.

"The recent increase in NAND flash pricing has benefitted memory chip makers, but also has served as a major damper on the market for SSDs used in notebooks," Yang said. "About 90% of an SSD's value consists of NAND flash memory, so with the pricing for such chips rising, consumer and corporate adoption of solid-state storage have been slowed."

SSDs can serve as replacements for hard disk drives in personal computers, storing data by using flash memory rather than traditional rotating media. SSDs are more rugged because they have no moving parts and are on average more than twice as fast as hard disks. Prospects for SSDs had been boosted by the rising demand for laptops, whose low storage requirements and long battery lives made them a good fit for solid-state storage.

"However, with the rise in NAND pricing, even a 32GB MLC SSD represents a major addition to the final price of a notebook PC," Yang said.