SK hynix, the Korean memory giant, has seen a surge in profits in the third quarter of this year, driven by the high demand for AI memory chips. The company’s dominance in HBM technology has been a significant factor in its success, but it appears that SK hynix is also making strides in the enterprise solid-state drive (eSSD) market. According to a report by the Korea Economic Daily, SK hynix is in talks with Tesla for a major order of eSSDs worth up to 1 trillion KRW (approximately USD 725 million).
Tesla’s request for a substantial and long-term supply of eSSDs from SK hynix comes as the electric car manufacturer invests heavily in AI servers and semiconductors. Tesla CEO Elon Musk has indicated that the company is allocating around USD 10 billion annually to enhance AI technologies for autonomous driving and humanoid robots.
Traditionally, hard disk drives (HDDs) were used as storage devices in servers. However, in the era of AI where rapid data processing is crucial, eSSDs have emerged as the preferred choice over HDDs. eSSDs are smaller, more energy-efficient, and offer faster processing speeds compared to HDDs, which use magnetic disks.
The Korea Economic Daily report highlights that eSSDs can significantly reduce electricity costs over a five-year period, with savings of up to 80% compared to HDDs. Additionally, eSSDs can lower the total cost by 46%, making them a more cost-effective storage solution for AI servers.
SK hynix, through its subsidiary Solidigm, has developed a 60TB eSSD, the largest in the industry. This product has been supplied to several major tech companies, and Tesla is reportedly among the companies interested in incorporating this high-capacity eSSD into their infrastructure.
Recent reports from the Chosun Daily suggest that the demand for eSSDs has surged, leading to an 80% price increase. To meet this growing demand, SK hynix and Solidigm are ramping up production of large-capacity SSDs using quad-level cell (QLC) technology tailored for enterprise use.
SK hynix’s third-quarter financial results have been impressive, with revenues reaching 17.5731 trillion won, operating profit at 7.03 trillion won (operating margin of 40%), and net profit at 5.7534 trillion won (net margin of 33%). HBM sales saw significant growth, increasing by over 70% from the previous quarter and more than 330% year-on-year.
Moreover, eSSDs have played a crucial role in driving SK hynix’s earnings, with eSSD sales in the third quarter accounting for over 60% of NAND sales and growing by more than 430% compared to the previous year.
Industry analysts at TrendForce have noted a surge in demand for enterprise SSDs in 2024, fueled by the increased deployment of NVIDIA GPU platforms and rising storage requirements driven by AI applications. The continued growth in demand from North American CSP customers and server brands indicates a promising outlook for the enterprise SSD market.
