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miscellaneous consequences
of the 2017 memory shortages

by Zsolt Kerekes, editor - September 7, 2017
Traditionally at this time of year I cast around for the the strategic threads which have underlied the stories reported in the SSD market. In 2017 there's no contest. There has been one factor which has dominated the fortunes and future directions of the entire SSD and memoryfication market. The memory shortages.

spellerbyte's SSD software factoryAs a long term evangelist of the SSD market and the rethinking of data architectures which it has enabled I have been naturally pleased to see that the adoption of solid state storage has gone so well.

We're now concluding series 19 of the SSD mouse site and the story line began before that with a different name but the same writer. If you missed those earlier story lines see why buy SSDs? - plot spoilers include - side-stepping the Y2K-CPU-GHz barriers to bring us faster applications processing, lowering the cost of big data and eliminating the software shackles of one more spin around the rotating media block which had fattened latencies and choked host interface arteries due to wasteful stuffit-just-in-case cache demands. But you don't need to know all those old episodes to appreciate where we are now.

SSD thinking is now at the center of all forward looking data architecture projects. SSD technology is the mainstream. Demand is high.

In many ways that's a good thing. But it's been a mixed blessing because production of memories has not kept pace with demand.

Some of the winners and losers from this have been easy to spot. But there have been new opportunities created by the memory shortages and higher prices of memory too. This has helped efficiency and utilization focused technologies to grab a hold on customer minds in ways which would otherwise have been harder or even impossible if memory prices had merely followed the decades old direction of travel.

effects on traditional memory makers

If you're one of those who has suffered from the memory shortages it may seem unfair that despite their miscalculations and over optimimism the very companies which caused the shortages of memory and higher prices - the major manufacturers of nand flash and DRAM - have been among the greatest beneficiaries.

In the first half of 2017 investment focused blogging sites were celebrating the increasing values of memory related companies on particular Micron which is a pure play memory stock.

And the upwards revaluing of memory fabs was a great help to the Toshiba group of companies which was looking to improve its solvency through the forced disposal of its memory business. (Think of how differently that prospect would have been interpreted if it had taken place against a backdrop of memory oversupply and plunging memory prices.)

For traditional memory companies the ability to allocate where its highly sought after memory chips were going in order to get the highest prices and establish influence in future strategic markets created opportunities for classic semiconductor game playing.

In the simplest business terms if a memory company has a choice of selling at a higher value - such as an enterprise SSD (instead of a consumer SSD) - then that's what it should do. Similarly systems such as AFAs and JBOFs start to look more attractive than selling drives. In reality none of the semiconductor companies had invested sufficiently in establishing viable systems brands before the 2017 shortages. But that didn't stop companies like Micron and Western Digital (which had a stake in Toshiba's fabs) from talking about it as a forward looking channel option.

re long time emerging memories

In the 13 years leading up to the memory shortages of 2017 there had been a variety of so called "emerging" alternative memory technologies including:- MRAM, PRAM, CMOx, PCM, ReRAM and others which at various times appeared in the SSD news pages - usually attached to a promise that one day soon they would fill an applications niche which upto that point had been dominated by nand flash. The perennial problem with those lookahead promises was that the density and cost of that pesky flash just kept improving (SLC, MLC, TLC, 4Xnm to 1Xnm and 2D to early 3D) so that the competitive comparison tipping point always lay at some point 2, 3 or 4 years in the future.

As the smallest capacity flash devices got bigger it was always possible that these other emerging memories might find small toe holds in the memory cliff face to which they could cling and attach but unless flash stopped getting better and stopped getting cheaper this looked to many observers like a race in freeze frame. The next generation flash was always more competitive than the next generation alternative nvm.

Aha! But then we had the 3D flash levels being stacked in a height busting tottering tower and the whole market edifice came crashing down with low yields and high prices and the evermore self improvement miracle of the flash market was caught in the spotlight of having been accidentally switched to pause.

In a news story in August 2017 commenting on this opportunity created by high traditional memory prices I said... "The unexpectedly higher price of DRAM and nand flash in the past several quarters due to demand and yield issues has been like manna from heaven to companies with alternative nvms. The change in relativistic competitive landscape has had the same effect as if the alternative nvms could time travel 2 years into the future while nand and DRAM have stayed looped in Groundhog Day."

Earlier - in May 2017 - in response to recent steps taken to productize and create sales channels for Everspin 's MRAM - I said - should we still be calling MRAM - emerging memory?

An advantage of the long emerging memories was that they could be manufactured in fabs which weren't already part of the DRAM / nand flash oligolopoly. And they were starting to clarify their suited application roles in the SSD and expanding SCM ecosystem:- as nvm in SoCs, caches in flash SSDs, low capacity SSDs, high temperature SSDs, persistent memory etc.

The exception was Optane / 3DX from Intel Micron which was evolved from and replaced Micron's earlier development of PCM. 3DX would have to fight internally for wafer starts in traditional memory fabs. The scale of how those internal priorities would be decided may be judged by the fact that Micron itself said in an earnings call in January 2017 that - "3D cross point is a very de minimis amount of revenue in fiscal 2017. We will ship for revenue, but it's actually a fairly small amount and then we've set the expectation for somewhere around 5% of company revenues in 2018."

And another difference with 3DX compared to other competing alt-nvms is that it apparently did not look like it would be any easier to make than the other 3D memories whose yields had caused the memory shortages. In January 2017 the CEO of BeSang said that looking at cross-point structure memories (such as Micron's 3DXpoint) - "is the worst nightmare for manufacturing".

re efficiency and utilization - subtext architecture, software and the cloud

What do I mean here by efficiency?

To put it crudely it's a comparison about the design and implementation of SSD drives and boxes.

I loudly called attention to this important business factor my 2012 article - Efficiency as internecine SSD competitive advantage. And I have often mentioned it in stories when praising one kind of design approach compared to another. But even though I thought this was a desperately important differentiator between competing product lines (as so did the innovative designers who had designed such products) you wouldn't have guessed this easily from the external signs seen in the rackmount SSD market. The reasons being that brand strength and actual bundled or implied software and services - coupled with the complexities of different use cases - were just some of the factors which could hide these internal differences from customers who were buying these systems.

Should they have guessed anyway - due to seeing different size boxes being offered to do exactly the same task? Don't blame the user for SSD box blindness. All they knew is what they were paying - and they weren't always too sure what they getting for their budgets anyway. Perhaps the investors in those AFA companies should have known - but they were usually the last to know anything. The street prices of enterprise flash storage arrays had become connected to chip headcount realities only by the most tenuous of formulas. And truth to tell - the difference between super efficient and less efficient designs and architectures didn't matter so much to small and medium users so long as the boxes they were buying today cost less than the boxes they had bought a little while before.

Designers of les efficient systems could argue - our boxes are more reliable (or some other distracting excuse) and by a process of waiting time - lo and behold - the chips got cheaper and the box was more profitable.

As long as you could buy all the chips you needed it didn't matter if some boxes used twice and many chips as others.

In contrast - in the mission critical embedded SSD drive market - where the power consumption of a single slot is looked at by someone who worries about watts in the box and what they do to reliability - the efficiency factor was a better appreciated personality trait of SSDs.

But let's get back to SSD boxes (hybrid arrays, AFAs etc).

Now in 2017 you can't get the chips - even if you can afford them. And maybe your customer won't like the price of the box even if you could assemble it.

Efficiency starts to matter more.

But there were some other words in the sub-headline too. Along with efficiency there was utilization.

What do I mean by that?

Utilization in this context is a measure of how much usefulness is delivered at the applications level by a particular raw size of installed flash. This usefulness benefit is usually delivered by a combination of software and firmware (and may also include within it a differently tiered and managed memory architecture). An extreme example of the the benefit can be where an existing flash array is improved to deliver significantly more reliability, performance or usable storage simply from a software update alone.

In the best designed systems efficiency and utilization tricks and tweaks are already integrated at many levels in the flash array.

Although software vendors like to talk about hyperconvergence, tiered memory, new stacks, memory defined storage etc - these can viewed as marketing and branding ideas. They will soon be as quaint sounding as the 1980s "RISC versus CISC".

During the years when new technology tricks do something better - their protagonists reap kudos. From the point of the memoryfication systems industry it doesn't greatly matter what label is given to a particular technique. The important thing is that the industry is working towards a better understanding of how to integrate very large populations of memory chips with diverse characteristics and grouped in historically defined interface combinations, and creating software bridges which satisfy legacy applications needs while also incorporating the newer memory focused demands of big data applications. In 10 to 20 years time all the best design ideas for memory systems will be mixed up in ASICs or FPGAs and seamlessly blended in the new standard software stack. The inventors may write blogs or books about how their IP babies changed the industry - but most people won't care.

Returning to the memory shortages... If - like me - you believe that the industry will most likely remain in a state where demand exceeds supply for a significant period (years rather than months of quarters) then the only affordable way that enterprise users will satisfy their needs is to head towards solutions suppliers which have the best efficiency and utilization stories to tell.

At its simplest - that will accelerate integration with the cloud - because for the past 10 years the cloud and webscale integrators have been ths companies with the sharpest focus on extracting value from improvment granularities which traditional box makers didn't care so much about.

But there are still huge opportunities in the enterprise box markets for companies ranging from JBOF to multipetabyte singing and dancing storage arrays to demonstrate by their pricing and their ability to satisfy shipment demands from repeat customers - that doing more with less flash is at the core of their thinking.

Software companies which promise they can upscale memory systems to do more with less chips in the box will be hot prospects. Symbolic IO was much praised in 2016 before the memory shortages. Their IP is bundled with hardware. But new memory efficiency partnerships can be software-only or software tied to a fab.

re hard drives and the memory shortages

In April 2017 Seagate was quick to squelch expectations in the investor community that a shortage of memory chips to make SSDs would have a positive impact on the sales of enterprise hard drives. Although there may have been some small changes of ordering patterns in the hybrid storage systems base Seagate wanted to dispel analyst expectations that there is equivalency in these markets and that an SSD sale won is an HDD sale lost.

This publication has noted that it is realistic for hard drives to retreat towards safer application roles which are compatible with but don't aim to challenge the clear and present reality of a confident SSDwards direction in server and storage markets. (Hard drives in an SSD world.)

And another factor is SSD-everywhere software. We've now in the post-HDD referential era of enterprise software. Most enterprise applications either doesn't work in a pure hard drive environment or if it did the performance would be so bad that you wouldn't want to use it.

In consumer markets particularly in PCs the deployment of HDDs and SSDs has evolved to be a horse of a different color . Nowadays SSD based PCs win or lose sales compared to other flash based devices such as tablets. The hard drive based PC - which survived SSD encroachment better than the unsuccessful market adaptation of the hybrid - was already on its way to becoming a vanishing species with or without nudges from the 2017 memory shortages.

re SSD manufacturers without captive memory fabs

The memory shortages of 2017 have highlighted the differences between those few SSD manufacturers who have their own captive source of memory and those others (the majority) which don't.

The common message I've heard from SSD makers in the latter category is that they could have sold more SSDs (and SSD based systems) if they had gotten more supplies of memory.

Another consequence of the shortages is that those without their own memory fabs have felt the squeeze most from pricing pressures.

Long before these recent shortages I had observerd that the memory fabless SSD companies tended to be those who had better designs and who invested most in both value added and innovatively efficient designs.

I also noted that in times of semiconductor memory gluts the fabless SSD companies were better positioned to grow market market share while remaining more profitable.

The memory shortages has been opening up cracks in SSD business plans which were too heavily predicated on expectations of falling costs.

An interesting development has been that even industries which weren't expecting to use the newest generations of highest density 3D flash - such as the industrial and military markets - have been hit by shortages in mature planar (2D) memory. You might have expected them to be immune to leading edge 3D TLC yield problems - because this is type of memory they are unlikely to use. The cascade of shortages into users of bigger line geometry components is partly because memory makers were already underway with hard to reverse plans to migrate most of their production to 3D before they realized the unprecenteded scale of associated problems. And also systems companies with SSD product lines which were ready to ramp to newer memories reacted by extending the shipments of older SSDs with as much memory as they could get until supplies dried up.

re phones, PCs and consumer gadgets

Industry reports said that PC makers were among the big consumer casualties of the 2017 memory shortages. Were users going to be happy to pay significantly more for the same old SSD based PC? No way. They didn't get the choice. The long decline in the PC market due to more than 10 years of badly designed SSD based notebooks was not an attractive enough market proposition to warrant high allocations of memory.

But the phone market was different.

People love their phones and it's a crisis if they can't get new ones.

re Samsung's phone business and memory

For Samsung which at the same time was one of the world's leading phone makers and memory makers the memory shortages provided opportunities to increase market share and profitability. (And maybe to expunge the negative market images of exploding batteries and recalls from its 2016 Galaxy 7's.)

re Apple's phone business and memory

Meanwhile centered around Apple (the other big phone maker - but without its own memory fabs - why? - because memory is a commodity Darling - which is also why Intel stayed so long out of the memory market which it created) the talk and speculation in the 3rd quarter of 2017 about the effects of the memory shortages on Apple were split between:- should Apple risk buying memory from its competitor Samsung? (When this story surfaced in 2016 Samsung was optimistically anticipating a glut in its nand availability.) Or should Apple join a consortium to acquire Toshiba's memory business - and thereby secure its memory supplies?

These outcomes were still unknown at the time of writing this. For samples of the reported Apple memory mood music see WDC asks Apple to join its bid for Toshiba (Sept 6), Apple says it won't buy Toshiba products if WDC gains control (Sept 8), Apple in talks with group which includes Dell and Seagate to buy Toshiba (Sep 14).

clarification - re the 2017 memory shortages

If you're being pedantic you may ask why did I keep referring to the "2017" memory shortages in the notes above - didn't the shortages begin in 2016?

You're right they did. But it wasn't clear in 2016 just how long the shortages would last and how much of a lasting impact they would make. Based on the experiences of past memory business cycles and the upbeat messages from the memory market it would have been reasonable to anticipate a quicker supply correction. That didn't happen and so instead of being a blip caused the industry's changeoever to next generation chip capacity - the shortages and higher costs of memory became the new normal.

how long until there's a correction?

look to software mitigation as a memory shortage fixer

In July 2017 the measure of what do we mean by "2017 memory shortages" was succintly stated by market research company IC Insights which said in a report - "DRAM, unit shipments are actually forecast to show a decline this year (2017). Moreover, NAND shipments are forecast to increase only 2%."

There you have it. Even after bringing new production capacity onstream the effect of yield (usable chips versus defects) is that the number of memory chips coming out of the world's semiconductor fabs was about the same as it had been the year before. And although a proportion of these were higher capacity the demands for memory were for both more chips and higher density chips.

I dealt at length with "no easy fix at the fab level" nature of the flash memory shortages in a blog in July 2017 - 3D nand fab yield - the nth layer tax - are more dimensions of analysis needed to get a clearer picture of future 3D nand successions?. That analysis underlies my belief that for the remainder of 2017 and 2018 we can't realistically expect the semiconductor memory market to return to oversupply and plunging prices from efforts and resources under its own control.

Having read this far you won't be surprised that I think the biggest contribution to mitigate pain for users and producers of memory systems will come from better architecture based efficiencies and firmware and sofware based utilization improvements rather than more precise deposition in the wafer fabs.

By their very natue (being tightly coupled to controller IP and software cycles) these solutions will take time to prove their worth and further time to gain wider market acceptance. Think of it as a software correction to this memory supply cycle problem and you'll get a better feel for the dynamics. This is completey different to the traditional semiconductor fab based (tweak the machinery settings to up the yield) which provided quick market corrections in past decades.

PS - the main fault with this new article is that it's too short and as with all my new blogs has been published with its rough edges still visible. I'm confident that I will find much additional material to add to it as the memory shortages of 2017 unfold into 2018. And if I am in a position to do so I promise to write a retrospective look back from the post shortage viewpoint when that inevitably occurs.

Later:- PCIe SSDs was the only mainstream category of SSDs which increased shipments in Q3 2017 compared to the previous quarter according to market research company TrendFocus - reported in SSD news - November 2017.

more updates

Editor:- January 25, 2018 - Since writing the article above there have been 5 months of news in which there have been more examples of changes in the industry which I have interpreted in my editorial as having been strongly influenced by the memory shortages. Take a look at the archived news for more details. Here are some snippets:-
  • October 2017 - Infinidat announced a $95 million funding round round. (The shortages were a big boost to the projected longevity of hybrid arrays with HDDs inside).
  • November 2017 - lots of confirmation that alternative nvm companies were being more seriously business minded.
  • December 2017 - Diablo closed its doors. The shortages were a make or break litmus test for their products and revenue earning abilities. Also stretching the hard drive to eke more life out of the market - Toshiba sampled 10,500 RPM spin speeds.
  • January 2018 - Seagate's Multi Actuator technology was another life kicker for enterprise hard drives (maybe / maybe not). Kaminario which had focused on low DWPD AFAs exited the hardware supply business - while for exactly the same reasons (higher memory costs) - Violin found that its high DWPD AFAs now looked more competitive.
Something I didn't write about was the effect of the shortages on my company as a deeply embedded SSD ecosystem publisher. Take a look at my new blog - Did SSD ads become obsolete because of the memory shortages in 2017?

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