Why are 1TB SD cards so expensive?

GnarlyKnuckles on 26/04/2023 - 02:52

Why does a 1TB SD card (or 'micro SD card') cost as much as it does at the moment; i.e., over $100? It's a tiny thing, and it does not contain appreciable amounts of gold/platinum etc. …

What exactly is involved in producing that tiny little thing that makes it so expensive to buy?

Surely the answer is not that the cost of its physical construction/production is high, because that would of course be 100% automated in this day and age.

So, it's not that the tiny little thing contains a substantial amount of precious metal, and it's not that there's a substantial 'human labour' cost associated with creating it … so why are they so expensive?

There must be a logical explanation, because even on the 'free/international market' the prices remain pretty competitive, I'm just trying to understand what that explanation is to satisfy my own curiosity.

Computing 1TB Memory Card SD Card

Comments

  • Jolakot on 26/04/2023 - 03:39
    +7

    The equipment required to produce cutting-edge tech is immensely expensive, as in multiple billions for a new factory

    Obviously they have to recoup this investment by amortizing that cost over each chip sold, which is the majority of the cost right now

    Eventually competitors catch up and prices drop, then the cycle repeats anew

      • SydStrand on 26/04/2023 - 04:22
        +15

        'Ludicrous prices' lol. You're getting a product for $100 that would have seemed like science fiction to someone from 2010, and you still think you're getting ripped off by the SD card cartel.

        There are few players in chip production because the cost of producing high density chips is prohibitively expensive and the technology is incredibly specialised. There's literally only one company (ASML) that produces the lithography machines needed for new chips and only a small handful of companies (TSMC, Samsung, etc.) have the resources or expertise to buy and use them. Intel is one of the few companies that has the resources to invest into its own production. China's own domestic semiconductor experiment thus far, is a failure.

        You think if Intel and freakin' China are having this much difficulty, that chip manufacturing is easy? Or cheap? If just anyone can enter the lithography market to compete with ASML to steal market share in this multi billion dollar industry, you don't think they would have already? But sure, SD cards are small and you think manufacturing is automated, so we must be getting ripped off!

        • GnarlyKnuckles on 26/04/2023 - 04:43
          -2

          Yo Sydney

          Right from the start I declared my complete ignorance in this field … but I think that perhaps these simple few words supplied by you have given me quite some insight into the situation:

          There's literally only one company (ASML) …

          • SydStrand on 26/04/2023 - 04:59
            +2

            @GnarlyKnuckles: Yes. That's right. They sell machines for half a billion dollars. It's a lot of money! It's also a free market, so you're free to start GnarlyKnuckles Inc, sell machines that compete with ASML, and become a billionaire. The fact no one from the world's richest bleeding edge companies to China has been able to successfully compete and achieve chip production independence should speak volumes about the complexity and cost of chip production. Yet you seem all too happy to handwave these costs away as either collusion, or minimise them with ignorant comments like 'All the 'R&D' has been done years ago.'

            • mskeggs on 26/04/2023 - 07:56

              @SydStrand: We should also acknowledge the USA has restrictions against exporting some cutting edge chip tech to China, which also keeps prices high.

              • scotty on 26/04/2023 - 08:35

                @mskeggs: ASML is a dutch company though, and most cutting edge chips weren't produced in China in the first place. However high-capacity SD cards aren't anywhere near cutting edge silicons anyway.

              • GordonD on 26/04/2023 - 11:12

                @mskeggs:

                We should also acknowledge the USA has restrictions against exporting some cutting edge chip tech to China, which also keeps prices high.

                The question that only a few years will answer is whether Washington coercing the Netherlands into not supplying China with the latest chip fab technology will just result in the Chinese government encouraging Chinese companies to develop their own as fast as they can, costing ASML not just billions in lost sales now, but also loss of market dominance in the long term.

                This is the advantage of state capitalism. In the rest of the world no-one invests billions unless its to their own business's advantage. In China the government can direct investment to where it produces a collective advantage.

          • mskeggs on 26/04/2023 - 07:54

            @GnarlyKnuckles: To be clear, this isn’t some unfair monopoly, but that they have the technical capability ahead of competitors.
            China, for example, is incredibly motivated to catch up, but is still behind.

            • Clear on 26/04/2023 - 11:40

              @mskeggs: YMTC are one of those Chinese companies looking to catch up. Their flash is being found in the cheap Amazon SSDs and I have to say they're performing really well. Despite being on US government ban lists they're still appearing in "US brands" like Patriot Memory.

      • Jolakot on 26/04/2023 - 11:55
        +1

        There's a ton of competition in that space, but mostly at the bottom end where the rnd costs are paid off and the processes are well established. A 32GB card is cheap as, because there's a bunch of competition. Eventually the technology and processes for 1TB chips will flow down as it always does, and they'll become cheap too

  • Italkdigital on 26/04/2023 - 04:12

    Anything thats reduced considerably in size usually costs more,.. example top of the range computer in the palm of your hand,..
    i.e.Samsungs 5G S23 Ultra 1 TB Mobile Phone
    Just the 5G modem built in above mobile shits over most dedicated portable 5G modems in speed, so yes ones paying alot for these but for the high quality and breaking technology

    Anyway prices reduce when an item is bought considerably to recoup the past costs "as stated lby person above" to recoup investments in design, machinery to make and other factors, considering most new phones are moving sway from the micro sd slot probably sales have dropped for these, probably their isnt much demand for 1TB sdcards in general, well storage sizes have increased in phones too and prices of these bigger storage phones too and maybe most dont justify adding another 1 TB to their phones due to costs or needs

    And probably one to mention usually the top tier device usually is high in price over its lesser counterparts what ever it may be and these top tier devices are more of a luxury item then a need or could be just creed from the manufacturers of these devices

    Edit: just searched and checked jbhifi and officeworks stores, looks like prices have gone up for memory cards, actually don't see and 1 TB cards and the 512gb is close to $100, I'm sure they were around the $80 mark while back

    My 2 cents lolz

  • stirlo on 26/04/2023 - 04:34

    There's a fixed cost per memory chip and multiple of these are added together to get to the 1TB.

    A 64gb card could have 4 16gb chips while a 1TB needs 64 of these 16gb chips. It follows that logically the 1TB card should be 16 times as expensive to make. Fortunately considering packaging, shipping and marketing costs are the same the cost difference is less than 16x but it still will be substantially more simply because there's more chips inside it.

    • GnarlyKnuckles on 26/04/2023 - 05:01
      -2

      Ahhh … so:

      A 64GB card could have four 16GB chips, whereas a 1TB card needs sixty-four of these 16GB chips? Because (16 x 4 = 64), and (64 x 16 = 1024)? OK, that gives me more to think about …

    • Italkdigital on 26/04/2023 - 05:09

      If it wasnt 430pm in the morning id go on further

      but one fact,.. you seem to have the idea its the memory cartel that control the end pricing,..you do realise inbetween there are other players, well for example say buying Samsung's micro sd cards your not actiallu buying directly from Samsung your buying of Samsungs buyers, like example a brick and mortar store say the likes of JB-HiFi, Officeworks, Harvey Norman etc, do you think JB-HiFi and the other stores folliws your rationale,..

      There's a fixed cost per memory chip and multiple of these are added together to get to the 1TB

      I doubt very very much I'm sure with these stores everything thats top tier (aka: a luxury) will have there own "top tier" phrofit hikes, especially when there not a big mover in sales, if there a big mover obviously theres more competition from other stores say example a smaller size memory card, say 128gb, then the profits margins are reduced, one to move higher sales but then the profits are increased due to number of high sales, this obviously can be applied with the 1 TB micro sdcards but why would they there already making killer prohits due to the profit hike

      I bet ya jbhifi uses your rationale when spending large amounts of money for large amounts of various micro sdcards and other Samsung products they buy off Samsung,, thats if they buy directly off Samsung could be another middleman buying even larger amounts at even cheaper prices

      I guarantee you, you and I would be very shocked at the very low prices these big stores would buy stuff at, well the stores have there own over heads to pay for,.. mind you they still manage to make massive profits ever year

      also i could go on .. well also to mention theirs also different type of buyers that can effect the end price,.. thats for another time

      Night 🌙

      • GnarlyKnuckles on 26/04/2023 - 05:22
        -2

        Hey I-talkers, re:

        'one fact … you seem to have the idea its the memory cartel that control the end pricing'

        That is not true, but I was surprised to learn (here on OzBargain) that only one company has specific potentially exclusive capacities re production in this respect.

      • Nugs on 26/04/2023 - 07:38

        @Italkdigital
        "430pm in the morning"
        Huh?
        .

        • mskeggs on 26/04/2023 - 07:57
          +2

          It is both very early and nearly knock off time - hard to spend time thinking.

        • Italkdigital on 26/04/2023 - 15:13

          Bad habit, which I need to fix, well at that time havent even slept yet, dare I call Ozbargain addictive 😊

          Edit: I think you meant 4:30am?

  • Sinnerator on 26/04/2023 - 07:52

    Plus the other major factor of PEOPLE WILL PAY THAT PRICE. If no one bought anything at a given price then 2 options are lower price or delete product.

  • rumblytangara on 26/04/2023 - 08:47
    +1

    Since when does the price of any tech product boil down to the cost of the raw materials? This is like saying the cost of a human being should be $5.8 because that's the cost of the elements needed to make a person.

    It's always been the case in tech smaller is more expensive.

  • coffeeinmyveins on 26/04/2023 - 09:06

    It's a tiny thing, and it does not contain appreciable amounts of gold/platinum etc. …

    Since when is the size of something attributed to the cost of it? If anything the smaller it is the more tech needs to go into it to make it that small to begin with.

    Are you the same type of person that doesn't want to pay a plumber to come out and fix a leak because it only took 15 minutes and don't appreciate the skill that went into learning that?

    • GnarlyKnuckles on 28/04/2023 - 19:10
      -2

      No, I am not any 'type of person' that you can pigeon-hole based on a simple question about the price of 1 TB SD cards.

      Of course I understand that complete products made up of composite materials will cost more than the sum of the individual cost of each of those materials, I am not a fool.

      Perhaps I should have phrased this question differently … like this:

      Given that 1 TB SD cards have been around for many years now, i.e. it is not 'new technology', why do they remain so expensive?

      Someone above mentioned that 'There's literally only one company (ASML) that produces the lithography machines needed for new chips and only a small handful of companies (TSMC, Samsung, etc.) have the resources or expertise to buy and use them. That led me to wonder if there was some sort of agreement between this 'handful' of companies on pricing. That implied suggestion was ridiculed by some, but I'm not sure why. There are known/proven cases of price fixing between international entities that have been successfully prosecuted in the past, so it is not beyond the realms of possibility/it does happen sometimes (I am not a 'conspiracy theorist', by the way).

      Just for argument's sake, let up hypothesise that by now, after many years of global sales, the initial investment costs that ASML put up to 'invent'/begin producing 1TB SD cards have been recouped. In other words, let us assume that now their costs of production only include ongoing cost—not paying off debts/recouping initial establishment investment. So, raw materials, wages, real-estate-associated costs, and other associated 'costs of production' (energy/power, consumables, legal feels, etc.). How much could these all add up to 'per card'? Given the price of lower capacity cards, I would imagine not enough to justify a price of > $100 per 1 TB SD card.

      If indeed they are still recouping their initial establishment costs, all these years later, and are yet to turn a profit on selling these cards (which seems highly unlikely), I wonder how long that will remain the situation? When they do finally start turning a profit on this venture, can we expect the price of 1 TB SD cards to come tumbling back down to Earth? Would anyone out there who is knowledgeable in the relevant fields care to hazard a guess as to when this might be?

      • SydStrand on 01/05/2023 - 00:14

        Given that 1 TB SD cards have been around for many years now, i.e. it is not 'new technology', why do they remain so expensive?

        WTF are you talking about. You do realise that 1TB cards only came out in 2019, and the first cards cost nearly A$700. In 4 years, it's dropped to a fraction of that because manufacturing was scaled up. So much for the 'prices are so high and static, it must be collusion' theory.

        can we expect the price of 1 TB SD cards to come tumbling back down to Earth? Would anyone out there who is knowledgeable in the relevant fields care to hazard a guess as to when this might be?

        It's already 'tumbled down to Earth.' If you're expecting to save a few bucks, by the time 1TB has become even more mainstreamed, demand and production would then shift to 2TB, then 4TB, etc. Older storage prices will initially drop to clear out old inventory, but then flatline. It's why 64GB cards are cheap as chips but also steady. Every 64GB card you see see online is 'new old' stock. You're conjuring up needless conspiracy theories when easily-understood macroeconomic principles already explain your questions. You're complaining about 'high costs,' but look at $/GB. Other than occasional supply woes like COVID or Thai flooding, storage has been consistently dropping like a stone for virtually all storage media, whether it's HDD, SDD, flash, etc. You can buy a 512GB SD card now for less than I paid for a 512MB card in the early 00s. That's a thousand-fold increase in storage capacity, and yet you still whinge. I consider the matter resolved.

  • KaTst3R on 26/04/2023 - 09:39
    +1

    Tons of R&D goes into making a product. It is not just raw materials. Not only manufacturers have to squeeze more GB per card, it has to be faster and more reliable to meet the demand of current devices. Kinda useless to have a 1TB card that only writes 2MB/Second.

  • netjock on 26/04/2023 - 10:37

    1TB SSD is like $70. The $30 is the premium for going tiny. Basically the same thing but you have to get it into that tiny area.

    • Jolakot on 26/04/2023 - 11:53

      Smaller chips also have a higher dud rate as the margin for error is absolutely minuscule

      • mrkorrupt on 26/04/2023 - 12:38

        this is not entirely true, the defects per wafer and the smaller each chip is determines the potential for error.
        http://cloud.mooreelite.com/tools/die-yield-calculator/index…

        DIe W / H 3mm
        Dia 100mm
        DD 0.1
        Max without defect 569
        defects 36
        ~5%

        DIe W / H 1mm
        Dia 100mm
        DD 0.1
        Max without defect 4301
        defects 4
        ~0.1%

      • netjock on 26/04/2023 - 13:31

        That is what they want you to think. Below is the right answer. Smaller you get the challenge is the tech to go smaller. Not the output itself.

  • DAT on 01/05/2023 - 00:06

    Good question and OP has all the reason in the world to ask it because I personally heard it many times before, especially from people around me, who are very knowledgeable on many other areas but not very keen to dig about these day-to-day techs, its origins, costs etc.

    Sorry, too busy currently to really make a point or join this discussion. But I hope the following is a good starting point to explore & helps someone… Cheers

    https://www.youtube.com/watch?v=iSVHp6CAyQ8 [Why The World Relies On ASML For Machines That Print Chips]

    https://www.youtube.com/watch?v=SB8qIO6Ti_M [How ASML Won Lithography (& Why Japan Lost)]

    https://www.youtube.com/playlist?list=PLKtxx9TnH76R3D0aXnw-I… [ASML Analysis]

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