[Peace&Chips] AI-Grown Server Storage Device... Created a Fabless Company Worth 1 Trillion Won

Leading SSD Controller 'Pado' Becomes Unicorn Company
SSD Replacing HDD Gains Presence in Server Market
Samsung Electronics and SK Hynix Hold About 70% Market Share

Editor's NoteSemiconductors, often called the rice of modern industry. Although it's a term we hear every day, it's hard to explain when asked. Peace & Chips will make the complex concepts and overall trends of the semiconductor industry easy to digest for you. Just bring your spoon.

[Peace&Chips] AI-Grown Server Storage Device... Created a Fabless Company Worth 1 Trillion Won

Recently, there was welcome news from the domestic fabless (semiconductor design) startup industry. 'Pado' became a unicorn company (a private company valued at over 1 trillion KRW) through a pre-IPO (pre-listing equity investment).

South Korea is a semiconductor powerhouse, but limited to memory. Pado attracted attention by achieving results in the barren field of non-memory (system) semiconductors. It is the first unicorn company case among fabless startups.

Pado increased its corporate value by introducing server solid-state drive (SSD) controllers used in data centers. While its leading technology compared to competitors is its greatest weapon, the bright future of the server SSD market likely also influenced this.

The SSD controller that Pado focuses on is a system semiconductor that enhances SSD stability. SSDs are devices that store large amounts of information using flash memory, and they serve the same role as hard disk drives (HDDs), which were widely used before.

SSD has less heat generation and noise than HDDs and faster speeds. This is why SSDs have almost replaced HDDs in the PC and laptop markets. However, in the server market, SSDs have not fully taken over HDD market share. Higher prices and smaller capacities compared to HDDs have held them back.

However, recently there are signs of meaningful market changes. Due to the expansion of artificial intelligence (AI) services and other factors, the amount of data processed by servers is rapidly increasing. To support this, SSD installation is essential. The release of SSDs that overcome previous disadvantages is also strengthening positive market outlooks.

Market research firm Omdia forecasts that in the server storage market divided between SSDs and HDDs, the ratio of SSD to HDD will be 53 to 47 this year. By 2026, this ratio is expected to widen to 59 to 41.

This is welcome news for the domestic industry. Samsung Electronics (1st place) and SK Hynix (2nd place) together hold about 70% of the server SSD market share. Although the semiconductor market has recently been sluggish, causing some stagnation in the server SSD market, the long-term outlook is bright.

Omdia predicts the server SSD market size this year to be 16.819 billion USD. By 2026, it is expected to grow significantly to 33.645 billion USD. The compound annual growth rate from 2021 to 2026 is estimated at 12.7%. Depending on the development of AI services, the future market growth rate could become even steeper.