The answer is, no. Why are storage prices less stable than CPU prices??
The first reason is demand elasticity, if the price of rice rises from 2 yuan per jin to 5 yuan per jin, the total amount of rice consumed by my family will not change much over the year, whether the price rises or not, we still have to buy it, which means it is inelastic, if lotus root sells for 5 yuan per jin and potatoes for 2 yuan per jin, it means that throughout the year, the quantity of potatoes purchased will far exceed that of lotus root, price determines how much is bought, which means it is elastic. How does this translate to computers? A machine only needs one CPU which is inelastic, therefore, the total market for CPUs remains relatively unchanged, however, storage is like consuming lotus root or potatoes, it has both demand elasticity and budget elasticity, how do we understand this?, for example, if 512G costs 500 yuan, and 1T costs 800 yuan, the time for consumers transitioning from 512G to 1T varies, some consumers may need 3 years, others may need 5 years, and some may find 512G sufficient for 10 years, another factor is budget elasticity (price) differences, some consumers are willing to pay 500 yuan, while others may only be willing to pay 800 after three years, and some may never be willing to pay 800 yuan, in 2023 the price of storage dropped significantly, currently, it is about 40% of the price in 2025, at that time, there were 1T phones selling for over 1000 yuan.
The second reason is the different status of storage and CPU, CPU and the operating system determine the entire machine ecosystem, storage must adapt to CPU, rather than the other way around, generally speaking, once a machine is determined, there is usually only one supplier for the CPU, from a supply chain perspective, a single CPU model typically has at least five or six storage manufacturers adapting to it, so there are more choices in the supply chain, thus, in terms of ecological status, computing is CPU first, storage is second, and display and other peripheral interfaces come later.
The third reason is periodicity, due to the fixed number of machines in total market demand, it is relatively stable (i.e., inelastic), thus, the supply quantity of CPUs is relatively stable (refer to the pricing method of monopolized products like chip 052), however, storage experiences instability in supply due to annual process improvements, for example, if my original production line was 1 million TB, after changing the production line, if my process density increased by 1.3 times, then the storage produced by this line
would be 1.3 million TB, leading to an oversupply in the market, which causes significant price fluctuations in storage, another factor is the packaging capacity of storage, which is generally a power of 2, for example, 128, 256, 512, 1T, as mentioned earlier, this demand varies for each consumer, leading to differences in budget elasticity and supply demand, which cannot fully coincide thus causing supply and demand instability, and storage also faces a factor of market speculation, domestic storage chips are not cheap, especially in segments where they are critically needed, such as in domestic requirements
for example, in the Xinchuang field, in these market segments, domestic storage is actually sold at a higher price than imported storage, globally, over 95% of storage supply comes from 8 manufacturers, Samsung, Micron, Hynix, Toshiba, Nanya, SanDisk, Yangtze Memory Technologies, Changxin Memory, these 8 manufacturers are generally aware of each other’s production capacities, and both Changxin Memory and Yangtze Memory in their respective fields have market shares of no more than 5%, meaning that from the perspective of other storage manufacturers, even if these two Chinese storage manufacturers’ 5% share were supplied to the market for free, the remaining over 90% of the market is not something these two Chinese manufacturers can control, thus, domestic storage manufacturers cannot extinguish the fires of foreign storage manufacturers, neither should they be overly arrogant, nor should they be overly humble, as long as in the future, they gradually replace production lines with domestic equipment, and slowly expand production capacity, storage products, will definitely have a significant potential for price drops.
Next, let’s discuss the next section Will SSDs replace mechanical hard drives?