2021 HDD Capacity Leap 31% Y/Y to 1.34ZB

This is an Executive Brief of Trendfocus, Inc.‘s Information Services:

2021 HDD Capacity Shipments Leap 31% Y/Y to a Massive 1.34ZB

In 2021, total capacity shipped for HDDs surged 31% Y/Y to 1.34ZB despite significant supply chain constraints and numerous Covid-19 pandemic-related market and production restrictions.

In 2020, the onset of the pandemic produced huge impacts on most end-markets for HDD storage other than at hyperscale companies that provided the backbone to enable the sudden and dramatic shifts to remote work and online education. In that year, the HDD industry shipped over 1ZB of capacity for the first time ever, so continued cloud expansion and a large recovery in enterprise OEM IT spending for much of 2021 fueled the stunning capacity growth. Even as SSD erosion of many client HDD markets continued to reduce HDD shipments for some applications, increased storage demand across many other HDD segments resulted in flat total Y/Y unit shipments.

Nearline, or capacity enterprise HDDs, is the growth driver addressing long-term storage capacity growth in cloud and at enterprise OEM system vendors. For 2021, total nearline capacity shipped exceed 928EBs, or 69% of total HDD capacity shipped. The nearline totals outpaced total HDD capacity shipped in 2019 – just 2 years prior. In Trendfocus’ latest long-term HDD forecast, total HDD capacity growth will track a 23% CAGR, with nearline itself responsible for most of the growth, following a 30% exabyte CAGR. Even as total HDD units continue to decline through 2024, demand for high-capacity HDD solutions will drive growth in both nearline and surveillance HDDs throughout and beyond the long-term forecast, resulting in a modest but steady increase in HDD shipments around 2025.

Although the 3-supplier HDD market remains highly competitive with each vendor seeking different solutions to drive areal density and per-drive capacity growth to meet this increasing demand for low-cost storage, the industry has recovered gross margins back to target levels of 30% or higher in recent quarters. This occurred despite dramatic logistics and component cost pressures and customers’ component shortages creating some short-term volatility in demand. Knowing that support of capacity growth will require significant, long-deferred investments into HDD components such as heads, substrates and media, the pricing discipline currently exercised by HDD vendors appears to be continuing.

Customers depending upon capacity and density growth will face flat-to-higher pricing on a like-for-like basis in the coming quarters as suppliers are forced to pass along their own increased costs to maintain their target margins. The HDD industry transition away from providing general purpose storage to addressing high-capacity demand has perhaps been accelerated by the unprecedented impacts of the pandemic, forcing the market to accept an industry operating model that sustainably addresses long-term needs.