The price of any product is defined by two parameters: scarcity and utility. In the case of computer hardware, the enormous demand for NVMe SSDs is progressively increasing as they become an indispensable piece today. That is why Samsung will raise the price of its SSDs, but is it an arbitrary decision or is there something else behind it?
In the world of large foundries that create huge amounts of chips on a large scale, it can be said that in terms of memory Samsung is the queen, while TSMC and Intel specialize more in logic and, therefore, in CPU and GPU. The South Korean multinational is not the only manufacturer of RAM and NAND Flash in a host of different variations, yet its strength above the rest is undeniable.
We have a proof in an NVMe SSD, where it is a vertically integrated business for them where all the components are designed and manufactured in-house. While other providers have to buy the different elements from third parties. Under this premise, it would be logical to expect them to enter a price-wear competition, but Samsung will do the opposite.
Why will Samsung raise the price of its SSDs?
The reason behind this has to do with the problems they are having in Xi’an and that we talked about a few days ago. These chip factories have been temporarily closed by local authorities and are responsible for manufacturing 40% of the NAND Flash memory used in NVMe SSDs, which represents 7% of the amount of this memory that is manufactured worldwide. Currently the Xi’an factory is responsible for manufacturing the 136-layer V-NAND used in the 980 Pro, as well as the 176-layer versions that we will see in a few months with PCIe Gen 4 and Gen 5 interfaces.
When the production chain is completely stopped there are a series of costs that continue to function, such as the salaries of the workers, the minimum maintenance cost of the same and the payment of the facilities and machinery. Technically, it is as if Samsung will suddenly find that only 60% of the chips do well instead of 100%. So in the end the only solution for the company is to charge those costs on the products that are launched on the market.
How much will we have to pay more?
If you are interested in a Samsung NVMe or SATA SSD and it is an indispensable piece, then our advice is not to think too much about it. Obviously, they cannot increase prices outrageously due to the fact that this would be detrimental to them in terms of market share, however, we do not know at the moment to what extent Samsung will raise the price of its SSDs.
Let’s not forget that NAND Flash memory has a large number of manufacturers, but Samsung is the one with the largest market share. Therefore, the price increase plan can have a contagion effect on the rest of the manufacturers in the sector, which can affect our pockets as users.
