Chinese companies reduce eSSD orders, Samsung and SK Hynix increase supply to the U.S

ZDNet Korea reported on November 12 that storage companies such as Samsung Electronics and SK Hynix have decided to allocate additional supplies of enterprise-level solid-state drives (eSSD) that are currently being discussed with Chinese customers to U.S. customers. Major Chinese artificial intelligence companies such as Alibaba, Baidu, and Tencent have decided to reduce the scale of eSSD orders to below expectations, and storage companies are aware of this situation. The report states that after the U.S. strengthened export controls on artificial intelligence to China, the supply of high-performance artificial intelligence semiconductors such as graphics processors and high-bandwidth memory has become difficult, leading to a decrease in the demand for accompanying storage.

eSSD is a NAND-based storage module primarily used for data centers, serving as an auxiliary storage device for data preservation. Insiders indicate that the main reason for the order reduction among Chinese companies is the difficulty in supplying artificial intelligence semiconductors. The U.S. government has effectively prohibited companies like NVIDIA and AMD from exporting high-performance artificial intelligence semiconductors to China, and the accompanying high-bandwidth memory is also subject to controls. Previously, Chinese companies had circumvented these controls through overseas entities and product disassembly, but these alternative routes have gradually faced obstacles, causing delays in investment plans.

Another insider stated that the adjustment of eSSD supply plans for China by storage companies is true, and the related supply volume plans are being shifted to U.S. cloud service providers. This person noted that the storage demand from U.S. data centers remains robust, and the supply shortage may continue into next year and the year after. Industry insiders say that the tight supply of NAND in global markets such as the U.S. is still ongoing, and the reduced demand in China will be taken up by U.S. data center companies; this adjustment will not have a significant impact on the overall demand for NAND and SSD.