In today’s computing field, mechanical hard disks (HDD) and solid-state drives (SSD) have become the hottest commodities, and the expansion of artificial intelligence data centers is devouring all available inventory. According to Seagate, Sandisk and Western Digital, market demand has become so high that customers have to sign long-term supply agreements of up to five years.
The reason why this contract period is so long is because customers are now planning their procurement plans around demand expansion. This demand is not only huge in scale, but will also bring a better balance to the supply chain. With customers driving steady demand, HDD and SSD manufacturers have an accurate picture of how many disk platters or NAND flash memory chips they need to produce to meet that demand. In the long run, this is a positive development for the supply chain's capacity expansion and adaptation, but for PC gamers, it poses a severe challenge in the short term.
Data from the beginning of this year shows that since mid-September last year, the price of mechanical hard drives has soared by an average of 46%. These changes have made mechanical hard drives an expensive commodity, but they pale in comparison to NAND flash memory chips, whose prices have jumped 500% in just a few months. The expansion of artificial intelligence data centers has depleted all remaining stocks of mechanical hard drives and solid-state drives, leaving the consumer PC market to compete for the few remaining products in gaming computers. Interestingly, mechanical hard drives contain almost no silicon material for storage purposes, so the significant increase in their prices is a supply chain issue and has nothing to do with the semiconductor industry. With the exception of silicon-based controllers, mechanical hard drive platters are made from materials that are not currently in short supply, yet high demand is still driving up prices.
The main driving force for the surge in demand for mechanical hard drives comes from large-scale purchases of high-capacity hard drives by large U.S. cloud service providers and hyperscale computing companies. Concerns about SSD data retention have also prompted some customers and policymakers to favor HDDs for certain workloads. Large cloud operators are expanding their exabyte-scale storage to meet artificial intelligence, analytics and archiving needs. Manufacturers report that capacity utilization is approaching full capacity as demand extends beyond traditional monitoring and backup applications. In particular, artificial intelligence infrastructure requires massive data storage for model training, prompting artificial intelligence laboratories to adopt storage solutions based on mechanical hard drives in scenarios where speed is not a priority.