LSI CEO Abhi Talwalkar told EE Times that the dynamics of the solid state disk market are shifting. Talwalkar hoped that SandForce, a startup he purchased in 2011 for $370 million would grow up to 35 percent this year but instead it grew only 10 percent. The reason for this is because in 2011 NAND flash memory makers cut capital spending because they believed the NAND flash memory chip market was in oversupply. As a result, NAND flash prices went up around 20 percent this year. At the same time, chip makers like Samsung focused on selling SSDs using own NAND flash memory and controllers, limitting the growth potential of third-party firms like SandForce.
Talwalkar expects that in a couple of years, up to 80 percent of client SSDs will come from NAND flash memory makers:
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.