A dire memory shortage is causing infrastructure prices to spike, but organizations can minimize disruptions through cloud bursting, storage as a service, and creative financing.
By David Stalcup
One of Sanity’s SVOD (Subscription Video) customers is set to refresh their transcoding servers, they use to process video. These servers typically are populated with 16GB memory sticks for the ephemeral workload, but due to shortages in the memory and storage supply chains, these memory sticks are completely unavailable.
Not delayed. Not wildly marked up. The customer simply can’t order them because the supply has been exhausted.
Their only option is to move to 32GB memory sticks, which of course doubles the price of memory for each server. As a result, the quote has exploded 60% per server in the previous 90 days and these same servers ordered a year ago have increased by nearly 300%.
For companies that navigated COVID-era supply chain problems, there’s a temptation to wait things out and hope that prices will fall the same way they did in 2022. The trigger for the sharp price decline post-pandemic was an overproduction of memory and storage components which eventually led to a price crash. Manufacturers are currently running their fabrication campuses at 100% of utilization. In a published report from August 20264th the big three fabricators of Nand and memory Samsung, SK Hynix and Micron announced that their 2027 production is officially sold out. Long term contracts with Hyperscalers, OEM’s and LLM’s have consumed a majority of future production into the next year. We should see availability improve modestly by early to mid-2028, but prices are highly unlikely to fall to their previous levels. New fabrication campuses will be coming online in late 2027 and this will have a positive impact on inventory levels and availability of memory and Nand products. However, CEO’s for Sandisk, Samsung and Micron have all made public statements indicating they are monitoring current consumption rates of Nand and memory products and they will adjust their fabrication capability accordingly to avoid a repeat of the market crash they experienced in 2022. In other words, we have entered a brave new world for pricing of memory and SSD’s going forward.
This doesn’t mean that organizations are stuck, however. The cloud, storage as a service, and financing all offer viable options for keeping infrastructure environments stable and modernized.
Roadmap #1: Use the Cloud as a Bridge
When the public cloud first emerged as a real option for enterprise computing, many organizations explored whether it would provide a less expensive option for their IT environments. In reality, cloud costs often proved to be more expensive than on-premises infrastructure, at least for steady-state computing needs. But this current scenariot scenario may be an exception. The major hyperscalers have not yet passed cost increases on to customers to the same extent that infrastructure suppliers have, and some organizations are looking to the cloud as an intermediary step that can carry them through this challenging time.
Consider customers with consistent and steady state processing needs who need to expand or refresh their current infrastructure. By temporarily moving workloads to the public cloud, they may be able to bridge the gap of additional compute power or create an efficient and cost competitive DR architecture. Once the worst of the current shortage is over, organizations may opt to spin down these cloud environments, or else maintain a hybrid architecture that provides permanent flexibility and bursting capabilities.
Roadmap #2: Exploit the Storage as a Service Workaround
Most IT leaders know that major storage vendors like Dell and NetApp offer managed on-premises storage infrastructure through storage as a service (STaaS) agreements. But what many leaders don’t realize is that these vendors typically set aside hardware specifically for these arrangements. This means that suppliers often have infrastructure available for STaaS, even when their warehouse shelves are otherwise completely empty.
So, if you’re looking to replace your storage infrastructure, and you’re told there will be a four- to six-month wait, consider asking about STaaS agreements as a workaround. You might be able to get new hardware into your datacenter with essentially zero lead time. STaaS also provides consumption-based pricing, allowing organizations to pay for the capacity they use rather than making a large upfront capital purchase. Historically, these STaaS have been priced at a premium but in todays escalating cost environment, they may provide an opportunity to fulfill a data storage need at a very competitive price.
Roadmap #3: Finance Urgent Needs
Finally, buyers can work with a partner like Sanity Solutions, and Sanity Capital, on financing options that help them procure infrastructure now, while pushing much of the financial burden to future budget cycles. This roadmap option can include low-cost loans, and it is especially attractive for organizations that are required to keep infrastructure on-premises for regulatory compliance reasons.
While financing does not change the cost of infrastructure, it provides a path to replacing aging or unsupported equipment without overwhelming the current year’s budget.
We can help our customers model several financing and architecture options, comparing the immediate and long-term costs of each. Sometimes, this may involve combining elements of different options: for example, financing some on-premises infrastructure while turning to the cloud to accommodate peak demand.
Typically, the process starts with a simple conversation where we learn more about our customers’ needs. Lately, we’ve also found ourselves dispelling their misconceptions, such as the idea that memory and storage prices are likely to fall soon (which seems to be quite pervasive at the moment, even though it’s incorrect). These memory and Nand markets are quite complex and there are many drivers to this previously unseen behaviors in the marketplace.
Ultimately, our customers choose what’s right for them. It’s our job to provide accurate information, explain the tradeoffs, and then help them follow the roadmap that will get them where they want to go.
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