Phison Electronics and Silicon Motion, two leading designers of SSD controllers from Taiwan, cannot get enough chips from their contract manufacturers, according to a story from DigiTimes that corroborates with a report that TrendForce published earlier this week. The two companies reportedly ‘stopped offering quotes for new orders’ and are considering 10% to 15% price hikes for SSD controllers in Q1 2021. If SSD controllers get more expensive, this could somewhat offset the declines in 3D NAND prices that are projected to result in big savings for shoppers early next year. 

NAND memory is a commodity, and its prices largely depend on the balance of supply and demand. In contrast, controllers for solid-state drives and other storage devices that use flash memory are produced by contract semiconductor manufacturers. Given that foundries are overwhelmed with orders from virtually all of their customers these days, it is not easy for SSD controller makers to place orders for extra units. 

Modern SSD controllers are made using fairly advanced process technologies, so their ongoing cost will depend on high demand for production and TSMC’s rumored decision to terminate discounts for bigger clients with long-term contracts.

Both Phison Electronics and Silicon Motion traditionally focus on the so-called turnkey SSD solutions that include a controller, a firmware, NAND memory, and production service. Essentially, both companies sell entire SSDs that can be customized by their customers. If they increase quotes of the whole SSDs, then contrary to expectations of TrendForce, SSDs will get more expensive in Q1 2021. 

However, if the price hikes will only affect controllers, then SSDs might still get cheaper next quarter; SSD controllers are a small part of the overall cost of a drive, while flash comprises the bulk of the build of materials.