Storage Under Siege: SSDs and HDDs 'Booked' Until 2029, What Remains for Users?
The rapid expansion of artificial intelligence and cloud infrastructure is profoundly impacting the production chain and the relationship between storage solution producers and their main customers, large hyperscalers such as Meta, Amazon, Google, and Microsoft.
On the sidelines of the quarterly reports from SanDisk, Seagate, and Western Digital, it has emerged that storage device manufacturers are increasingly adopting long-term supply agreements (LTAs), with horizons extending up to five years for SSDs and slightly less for hard drives. SanDisk stated that multi-year agreements in the SSD segment can extend up to 5 years and include progressive volume commitments, with combinations of fixed and variable prices. This approach allows manufacturers to achieve clearer visibility on future demand while stabilizing their financial results.
A similar dynamic is affecting the hard drive market. Seagate announced having exabyte-scale agreements with almost all major cloud and hyperscale clients, with nearline capacity already substantially allocated until 2027. The company is also finalizing 'build-to-order' contracts that define tailored configurations and prices, with prospects extending beyond 2028. Western Digital has also mentioned agreements extending until 2028-2029. Overall, the storage sector—traditionally considered a commodity—is taking on more predictable and planned characteristics.
The introduction of long-term supply agreements allows manufacturers to align the entire production chain more efficiently: from the start of NAND wafers to HDD production, up to the availability of controllers and components. This reduces the risk of both oversupply and undersupply concerning demand. With a guaranteed demand base, companies are more inclined to invest in new factories, assembly lines, and advanced technologies.
Despite the increased predictability, expanding production capacity remains a gradual process. Constructing and starting mass production in new NAND fabs takes years, while in the HDD segment, progress also depends on third-party suppliers for key components like magnetic media and read/write heads. This implies that, in the short term, supply may remain under pressure before new capacities fully ramp up.
One of the main uncertainties concerns the repercussions on the consumer market. On one hand, long-term planning could avoid extreme cycles of surplus and shortage, contributing to greater price stability. On the other hand, prioritizing large cloud customers may limit immediate availability for other segments. At the moment, it remains to be seen to what extent manufacturers will use the additional capacity to also meet consumer demand, beyond that already guaranteed by multi-year contracts. However, it is easily conceivable that the investment with the highest return will be preferred, and as a result, an improvement in the situation for the consumer market in the short term is not desirable.