China-US AI resonance! Demand for enterprise SSDs (eSSD) is set to surge in the second half of the year.

Title context: China-US AI resonance! Demand for enterprise SSDs (eSSD) is set to surge in the second half of the year. Text: The AI wave is reshaping the global storage market landscape, with the two major engines of North America and China driving in sync, and enterprise solid-state drives (eSSD) ushering in a structural demand inflection point. According to TrendForce data, over the past two weeks, major U.S. cloud service providers (CSPs) have successively raised their eSSD procurement forecasts, pushing total eSSD orders in the fourth quarter of this year to potentially surpass the historical record set in the third quarter. According to Wind Trading Desk, Citi Research predicted in a report released on September 21 that, driven by the spread of continual learning technology, eSSD demand will grow 52.9% year over year in 2027, and the NAND supply-demand gap will widen to -6.1% by then. The demand structure is also undergoing a qualitative shift: high-capacity, low-cost QLC (quad-level cell) products are accelerating their rise, keeping pace with the high-performance TLC products that previously dominated the market, marking that eSSD application scenarios have expanded from AI model training and inference to a broader AI application layer. Industry insiders said that, affected by NAND manufacturers strengthening capacity and pricing controls, upward pressure on eSSD prices is expected to continue into the fourth quarter. Two major demand engines: North American Agent AI and China's KV cache offloading Industry experts pointed out that eSSD demand in the second half of the year will be jointly driven by two main lines - the expansion of Agent AI in North America and the application of KV cache offloading technology in China. In North America, with the accelerating adoption of Agent AI, demand for large-scale real-time data retrieval and caching is rising sharply. TrendForce analysis said that when Agent AI performs autonomous decision-making and actions, it needs rapid access to and storage of large amounts of contextual data, which will significantly increase demand for high-performance eSSDs. Citi Research also noted that continual learning technology requires AI systems to continuously absorb new information while retaining historical data, thereby creating sustained demand for high-capacity storage. In China, AI companies represented by DeepSeek are actively promoting KV cache offloading solutions - this technology migrates lower-priority cache data during inference from high-performance memory (HBM, GDDR) to high-speed, high-capacity QLC solid-state drives, reducing reliance on expensive high-performance memory while improving model inference efficiency and compressing overall costs. QLC reshapes AI infrastructure architecture The core feature of this round of demand growth is the comprehensive rise of QLC products. Cloud service providers are actively leveraging QLC to balance high capacity and cost efficiency, with application scenarios covering vector database construction - a core component of AI search and recommendation systems. TrendForce believes this shift may drive the reconstruction of AI infrastructure design around QLC, with the impact extending beyond the procurement adjustments of a few hyperscale cloud vendors. Citi Research further pointed out that QLC-based near-GPU storage solutions will gradually gain market recognition to support more efficient data retention and retrieval near accelerators for AI systems. In addition, demand for advanced storage solutions such as XL Flash and HBF, as well as storage complementary technologies such as CXL, will also rise in tandem. Over a longer cycle, Citi forecasts that high-density eSSD demand will grow 53% and 41% year over year in 2027 and 2028, respectively, and replacement demand from HDD to SSD will also provide additional support for high-density storage adoption. Although consumer-grade NAND demand is under pressure due to weakness in the PC and mobile terminal markets, Citi believes strong enterprise-grade AI demand is sufficient to offset this drag. Supply side tightens, NAND manufacturers' pricing power strengthens Demand expansion is driving the NAND supply-demand balance to tilt faster toward sellers. Citi Research forecasts that NAND demand will grow 29% and 33% year over year in 2027 and 2028, respectively, while supply growth will be only 21% and 25% - the gap stems from storage manufacturers generally prioritizing capital expenditure toward DRAM and HBM capacity expansion, with relatively restrained new investment in NAND, thereby forming supply-demand gaps of -6.1% in 2027 and -5.5% in 2028 (the 2026 estimate is only -0.8%). TrendForce also pointed out that major NAND manufacturers including Samsung Electronics, SK Hynix, Micron, Kioxia and YMTC are strengthening control over capacity allocation and pricing in the enterprise market, and the possibility of further eSSD price increases is relatively high. In the second quarter of this year, in the eSSD market landscape, Samsung Electronics ranked first with revenue of $14.154 billion and a market share of 35.1%; SK Hynix and Solidigm together achieved $8.631 billion, accounting for 21.1%; Micron ranked third with $6.983 billion and a share of 17.1%. In the Chinese market, YMTC is expected to gain an opportunity to increase its share thanks to the surge in KV cache offloading demand. Citi Research maintains a "Buy" rating on both Samsung Electronics and SK Hynix, believing both are expected to benefit from tightening NAND fundamentals and AI-driven structural storage demand growth. This article is reprinted from "Wallstreetcn", GMTEight editor: Jiang Yuanhua.