Big Data

C2Q 2024 Hard Disk Drive Industry Update

This is data on C2Q 2024 HDD shipments (and some SSD trends from WD) from the August 2024 Digital Storage Technology Newsletter.

Total HDD shipments in C1Q 2024 were up about 1.0% compared with C1Q 2024 (30.3M versus 29.7M). Total exabytes shipped in C2Q 2024 were up about 10.6% from C1Q 2024, driven by greater sales of mass storage HDDs, such as nearline drives. HDD revenues ($4.51B) were up about 14.6% from the prior quarter. This quarter continued the upward trend in unit and exabyte shipments as well as revenues that started two quarters ago. Other memory and storage products have also recovered.

Seagate said their HDD revenue was $1.727B in the quarter with Mass Capacity HDDs accounting for 83% of this revenue. 79% of the company’s product was sold directly to OEMs (up from 75% in the prior quarter). Total storage capacity shipped was 114.2EB with 103.9EB for Mass Capacity and 8.3TB for Nearline HDDs, the balance of 10.3EB was shipped for legacy applications. The average HDD capacity was 9.3TB with Mass Capacity average capacity at 12.6TB and legacy average capacity at 2.5TB. The company shipped about 12.3M units in the quarter with an ASP of $140.9.

Western Digital reported that their C2Q 2024 total HDD EB shipments increased by 12% from the prior quarter (I estimate this at 162.1EB) and that they had shipped 125EB of nearline storage. They also said that they shipped 2.3M client compute units, consumer shipped units were 1.9M and data center (cloud HDD unit shipments) were 7.9M. That means the average capacity of their nearline HDDs was about 15.8TB. The company’s ASP was $163 (up from the prior quarter at $15). Total HDD revenue was $2.003B. Cloud storage was about 50% of the company’s revenue in this quarter (compared to 45% in the prior quarter).

Dave Mosley of Seagate said that. “…we are seeing strong nearline cloud demand growth from customers globally. Fourth quarter nearline cloud revenue more than doubled from the year ago period, and we expect growth to continue in fiscal 2025. We attribute the underlying demand drivers to an increase from both traditional cloud computing workloads, as well as new AI-related deployments. We believe this demand rebound follows a period of deferred HDD storage investments by cloud providers as they prioritize spending towards compute-intensive infrastructure.

While HDD demand pull-through related to AI is still relatively small, we believe HDDs will play a crucial role in enabling both of these phases of the AI adoption curve. By offering cost-efficient, scalable storage solutions, HDDs are ideal for maintaining the integrity of AI training data sets as well as preserving the valuable content that AI engines are projected to generate in the future.

In the enterprise OEM markets, we observed a gradual improvement in demand for the second consecutive quarter; and continue to project stronger growth in the second half of the calendar year, driven by both modest improvement in traditional server unit demand and increased exabyte content.”

Seagate says that it is pursuing a built to order (BTO) strategy for their HDDs. They also said that they should have completed HAMR-based Mozaic 3+ production qualification with a leading cloud partner in the September quarter. They also shipped some HAMR-based Mozaic drives for revenue to non-cloud customers. They are also launching new HAMR HDD qualifications and expect a volume ramp towards mid-calendar 2025. The company is also pushing development of its Mozaic 4+ HDDs (40+TB). 28TB PMR products are also popular.

Gianluca Romano (Seagate CFO) said, for the June quarter, “Within our hard disk drive business, exabyte shipments grew 15% sequentially to 114 exabytes, while revenue increased 17% to $1.7 billion. Growing demand for our mass capacity products more than offset a sequential decline in the legacy and non-HDD businesses. Within the mass capacity market, revenue increased 22% sequentially to $1.4 billion, driven by strengthening global nearline cloud demand along with an improvement in the VIA market. Mass capacity shipments totaled 104 exabytes compared with 89 exabyte in the March quarter, up 17% sequentially. Mass capacity shipments now represent more than 90% of total HDD exabytes, reflecting the continued long-term secular growth for cost-efficient scalable storage.

…Turning now to our outlook, we expect mass capacity revenue to trend higher in September quarter and more than offset lower sales into the legacy markets. We continue to see demand growth from global cloud customers as well as a modest improvement in the nearline enterprise market.”

David Goeckeler of WDC said, “… AI Data Cycle is increasing the need for storage and creating new demand drivers across both Flash and HDD. Given this landscape, we expect Flash to benefit from both AI training and inference while HDD is poised to benefit at both the input and output stages of these AI models. To address the growing performance, power, and capacity requirements, we have developed our Flash and HDD product road maps to meet our end customer storage needs across the entire AI Data Cycle.

During our new era of NAND webinar last month, we introduced the world’s highest capacity BiCS8 two-terabyte QLC memory die specifically designed to meet growing data center and AI storage needs. Built on a chip bonded to array architecture, BiCS8 reinforces Western Digital and Kioxia’s leadership in cost and capital efficiency as well as superior I/O performance by integrating wafer bonding in advanced 3D manufacturing to establish a groundbreaking foundation for future scalability of 3D NAND. In addition, our 64-terabyte enterprise SSD is now being sampled with plans for volume shipment later this calendar year. Furthermore, our PCIe Gen 5-based enterprise SSD delivers best-in-class read performance as well as power efficiency.

The layers focus race is behind us. The emphasis is now shifting toward strategically timing the economic introduction of new longer-lasting nodes. Innovation now means enhancing power efficiency, performance, and capacity within these nodes, while capital decisions increasingly prioritize opportunities for margin expansion and revenue growth.

Turning to HDDs. Revenue growth was driven by strength in nearline demand and improved pricing. By leveraging our SMR leadership and lean cost structure, we have surpassed our target gross margin range, underscoring our ongoing commitment to improve future profitability.

On the technology front, we ship samples of our 32-terabyte UltraSMR/ePMR nearline hard drives to select customers. These drives feature advanced triple-stage actuators and OptiNAND technology which are designed for seamless qualification, integration, and deployment in hyperscale cloud and enterprise data centers while maintaining exceptional reliability.

As we look to the fiscal first quarter, we expect further growth driven by greater demand and more favorable pricing. Our cloud customers continue to transition to SMR, and we anticipate a third major cloud vendor to begin the ramp of adopting SMR in the fiscal first quarter.”

We saw a 10.5% average sales price (ASP) increase for HDDs from C1Q 2024 to C2Q 2024. The chart below shows this boost in ASP combined with the ASP in the prior quarter have HDD ASPs at the highest level they have been at since late in the 1990’s (almost to the ASP in 1998).

The figure below shows 2024 HDD market share to date (by units). Note that Toshiba C2Q 2024 market share was about 19%, down from 22% in the prior quarter.

The figure below (from earlier this year) shows our adjusted projections for total shipments of HDDs for a high projection, a median projection and a low projection. Total HDD unit shipments will likely continue to decline for the next year or so, due to the continuing decline in legacy HDD applications (such as PCs and consumer devices). However high capacity nearline HDD growth should continue in 2024 and in the future, driven for the demand for lower cost secondary storage in data center to support large amounts of incoming data to support AI training and other applications. This should raise the number annual shipping HDDs by 2027.

The increase in HDD prices indicate greater growth and a greater percentage of sales of nearline and other mass storage HDDs. It also indicates that demand is now greater than supply. Seagate reports providing HDDs on a build to order model and the other HDD companies will likely have similar strategies to deal the growth in demand, while all the HDD companies idled capacity during the downturn of the last couple of years.

Total HDD unit shipments in C2Q 2024 were up about 1% from the prior quarter, marking a third turn-around quarter for HDD demand. Capacity shipments were up 10.6% from the prior quarter and revenues were up about 14.6%. HAMR HDD qualifications are continuing and are on track for significant shipments in 2025.

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Adnen Hamouda

Software and web developer, network engineer, and tech blogger passionate about exploring the latest technologies and sharing insights with the community.

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