I normally don’t mention politics. My expertise is in technology and business, so I like to stick to those topics. But, an article in the Wall Street Journal today caught my eye. It is well worth a read, if you get a chance.
It a nutshell, the article describes growing tensions between the U.S. and China in response to Chinese firms attempting to acquire U.S semiconductor vendors and technology. According to the article, “Big U.S. players like Intel Corp. and Micron Technology Inc. find themselves in a bind—eager to expand in China but wary of losing out to state-sponsored rivals.” I cannot talk to the nuances of the geo-political landscape, but what I do know is flash memory, and this tension doesn’t look good.
Over the past few years, the IT storage industry has seen a dramatic uptick in the demand for NAND-based flash storage technology, and rightfully so. The benefits of flash storage are transformational and pervasive. Often not only do the applications run faster, the infrastructure also becomes more reliable and more cost-effective. If you remember your Economics 101 lessons, as demand increases, this sends signals to the industry to increase supply. And the enterprise storage industry has responded in that fashion. Nearly every storage player has some flash-based storage offering now. The issue is the NAND components that make up that flash storage. NAND is used for almost every technology product out there, consumer and enterprise. The demand for NAND is driven by smartphones, tablets, cars, and pretty much anything that has any form of intelligence inside it in addition to enterprise storage, and that demand is increasing everywhere…
If market forces were working properly, you would expect NAND manufacturers to also increase supply to meet these rising demands. As a result, users would get the flash technology they need, increased competition and innovation would help drive the price down, and everyone wins. But based on this article, that part looks to be on hold…. And just to reiterate, what is not on hold, however, is the ever-increasing demand for more flash. When demand continues to scale, but supply stagnates due to powerful outside forces, the result is not good. I am not sure how this is going to play out, but I do know this is something we need to watch, and watch closely. These tensions could shape the storage landscape for years to come.