The artificial intelligence fever has already begun to seriously strain the purchase of mechanical hard drives (HDD) and solid-state drives (SSD). This means that it’s no longer just the GPU, HBM, or DRAM markets that are under pressure. In other words, a shortage of HDDs and SSDs will gradually emerge, leading to continued price increases for these storage units. Consequently, HDD manufacturers are poised for a new golden age. As we’ve already seen with DRAM and NAND memory, they will aim to achieve record revenues. For example, Samsung’s profits in the last quarter were 49 times higher than the previous year, thanks to the DRAM crisis.
Now, the next bottleneck for the industry is an element as fundamental as storage. This is why major data center clients are signing long-term supply agreements for SSDs and HDDs that now range between three and five years. This is a very unusual duration for a market historically characterized by cycles and fluctuations in demand. In the case of SanDisk, SSD contracts extend up to five years. For HDDs, Seagate and Western Digital are reporting supply visibility extending to 2027, 2028, and even 2029.
Hyperscalers and Cloud Providers Are Already Trying to Secure SSD and HDD Storage
Companies like Google, Meta, Microsoft, and Amazon (AWS) are already seeking to safeguard their operations by increasing and guaranteeing future purchases of SSD and HDD storage. Generative AI, large-scale inference, AI agents, model training, dataset storage, video, analytics, and massive file archiving are all driving the need for additional exabytes. Simply buying HDDs or SSDs based on quarterly demand is no longer sufficient: clients want to ensure supply for several years to avoid being left behind in their infrastructure expansion.
SanDisk is the most striking example. The company has signed five long-term supply agreements, with durations ranging from one to five years. Three of these contracts, signed during its third fiscal quarter, have a minimum value of 42 billion dollars, while two others have already been closed in the current quarter. Furthermore, these agreements include financial commitments, price cap and floor mechanisms, and penalties to prevent clients from withdrawing if the market shifts again.
Something similar is happening with mechanical hard drives. Seagate states that its exabyte-scale supply agreements cover virtually all major cloud and hyperscale clients, with its nearline capacity (high-capacity HDDs) almost fully allocated until the 2027 calendar year. Another key player, Western Digital, is also seeing a notable improvement in order visibility, supported by the demand for high-capacity drives for AI data centers.
Mechanical Hard Drives Have Seen Modest Price Increases Compared to SSDs, Which Are Set to Nearly Double in Price
It’s ‘impossible’ for HDDs to cost as much as gold because they don’t use NAND memory like SSDs. However, like any business, that won’t stop the industry from achieving record revenues. HDDs require controllers and other electronic components. Meanwhile, fortunately, the strain will be more pronounced in nearline HDDs. That is, HDDs with capacities of 18 TB, 20 TB, 24 TB, 30 TB, or more. They are also optimized for 24/7 operation and promise good reliability, high volume, and a low cost per TB compared to SSDs.
Since September 2025, HDDs have seen their price increase, on average, by 46%. On the other hand, the contractual cost of NAND Flash memory for SSDs will increase between 70% and 75% this quarter compared to the previous one. This does affect the price of everyday or gaming SSDs, as companies are prioritizing the production of enterprise SSDs because they are much more expensive and are already pre-sold for years in advance.
For manufacturers, this situation has a positive aspect: multi-year contracts provide them with demand visibility they didn’t have before. Instead of manufacturing blindly and exposing themselves to the typical inventory glut cycle, they can now plan NAND wafer production, assembly lines, HDD production, heads, platters, and technologies like HAMR based on real commitments. So, if we thought that HDDs were reaching the end of their life cycle, with AI, this technology will continue to evolve to push the limits of capacity.
