2025-09-28 14:57Summary of the Conference Call on IT Hardware and Communications Equipment Industry Overview - The focus is on the IT Hardware and Communications Equipment industry, specifically the storage market and NAND pricing trends [1][2]. Key Points and Arguments 1. Storage Market Growth Projections: - Total storage estimates for CY25 have been adjusted upwards, with a forecast of 5% growth for CY26 and 2% growth for CY27 [2]. - The storage market is expected to grow at a CAGR of 7% from 2021 to 2026, with hardware growing at 6% and software/SaaS at 15% [17][18]. 2. NAND Pricing Impact: - Recent upward movements in NAND pricing are expected to affect storage players' revenues and margins, as NAND can account for up to 50% of COGS in storage hardware [3][8]. - The correlation between NAND pricing changes and product GM is delayed, typically taking about a quarter to reflect in revenue and margins [8][11]. 3. Market Dynamics: - The storage market has shown resilience year-to-date, although there are pockets of weakness, particularly in the public sector and EMEA [2]. - The anticipated recovery in enterprise spending and AI-related demand is expected to begin impacting the market around CY26 [2][17]. 4. Vendor Performance: - NetApp (NTAP) and Pure Storage (PSTG) are expected to see improvements in product GMs in the second half of the year, aided by strategic pre-buys [16]. - DELL and HPE are noted for their market share dynamics, with DELL being a consistent share donor and HPE maintaining stable market share [31][37][41]. 5. Software/SaaS Market Share: - Software/SaaS revenues are projected to remain a small portion of the overall market, expected to grow from 4% in 2026 to nearly 5% by CY27 [25][28]. 6. AFA vs. Disc/Hybrid Growth: - AFA (All-Flash Array) is expected to grow at a CAGR of 9%, while Disc/Hybrid is projected to grow at 6% from 2021 to 2026 [17][18]. Additional Important Insights - The storage market's growth is not correlating with trends in server and DC switching revenues, indicating that external storage is not fully participating in AI-related growth [18][19]. - Historical data shows a decline in the correlation between server revenues and external storage revenues, particularly as AI servers with higher ASPs ramp up [19][21]. - The overall storage market has experienced fluctuations, with an average growth of 6% over the past five years, and is now expected to average 8% growth in 2025-2026 [21][24]. Conclusion - The IT Hardware and Communications Equipment industry, particularly the storage segment, is poised for moderate growth driven by enterprise recovery and AI-related demand, despite challenges posed by NAND pricing volatility and market dynamics.