There have been many reports of increasing prices of digital storage and memory products such as hard disk drives, HDDs, solid state drives, SSDs and memory such as DRAM to meet the needs of AI workloads. However, it is likely that current demand and thus higher prices are driven by anticipated needs and the impression of shortages in production, which are likely short term.
AI workloads require lots of data for training. Additional storage capacity is likely require for inference as well, particularly with approaches such as retrieval augmented generation, or RAG, that uses domain specific data to improve the results with an existing large language model, LLM. The growth in AI projects is driving up the demand for storage and memory as well as GPUs and that is causing the prices of all types of memory and storage to increase.
This is a big change from the COVID related crash of all storage and memory technologies in 2022 and 2023. These recovered in 2024 with the consumption of excess inventories at customers. As a result, many manufacturers, such as HDD manufacturers, said that they would be very cautious about increasing their manufacturing capacity.
For HDDs the historical exabytes shipments from 2001 through 2024 is shown below. We can see the spike in exabyte shipments in 2020 and 2021 with anticipated cloud storage demand during the COVID pandemic and the massive slump in 2022 and 2023 as excessive inventories were consumed. 2024 saw continued growth, which is approximately in line with the average capacity shipment growth rate before COVID, indicated by the dashed line.
If we extrapolate the expected growth through 2030 for HDD shipments from Coughlin Associates (recently updated), we can see the expected growth in storage capacity shipments required to support AI and other data intensive workloads. The extrapolated storage shipments for HDDs in 2030 is about 4X higher than in 2024.
At the same time, due to the increase in the expected storage capacity per HDD through 2030 we expect that actual HDD shipments required to meet this projected demand will be about the same in 2030 as in 2024, at about 123M HDDs shipped versus about 124M HDDs shipped in 2030 in 2024. The historical HDD unit shipment chart since 2001 is shown below.
This is because the projected average storage capacity per shipped HDD is projected to grow from about 11TB in 2024 to about 47TB by 2030, about a 4.3X increase. This is in line with recent projections of 50+TB nearline HDDs in production by 2027 and thus in mass shipment by 2030 and with the continued shift to producing nearline high-capacity HDD production by the industry through 2030 as shown above.
The total HDD unit shipments through the second half of 2025 were about 59M units and we project that total shipments in 2025 will be about 120M units assuming a 3% higher shipment of high-capacity nearline HDDs in the second half of 2025, 61M units. This should be possible without bringing up more HDD production capacity, since 2024 HDD shipments were about 124M units. There is even the possibility that total HDD unit shipments could approach the 2024 shipments, 3% higher for 2025 than our current projection. We will review our projections after seeing C3Q 2025 shipments.
So, it seems that there is enough nearline HDD production capacity to meet expected long-term demand and thus it is likely that recent increases in nearline HDD prices are a combination of the longer-term contracts that the HDD companies have established with big HDD consumers to stabilize HDD prices after the last recovery in demand in late 2023, such as hyperscale data centers in addition to customers buying in anticipation of future needs for AI applications and thus driving up the price of HDDs currently available. This can create distortions in the actual demand, driving companies to purchase or try to purchase more than their real short-term need.
In the memory space, including DRAM and NAND flash, there is a long-term trend of a boom-and-bust cycle on capacity pricing, driven largely by the manufacturers building out production capacity when prices and thus margins are good and then stopping that production build out when all that new production comes on line and prices drop again.
SEMI recently announced that 300mm wafer fab spending to increase by 7% in 2025 over 2024 (older data shows the retrenchment in this spending in 2022 and 2023). This announcement says that memory-related fab spending is second after the logic and micro wafer fab spending growth. In particular, the announcement says that, DRAM-related equipment investment is expected to exceed $79 billion from 2026 to 2028, with 3D NAND investment reaching $56 billion over the same period. AI training and inference have driven comprehensive demand increases across various types of memory.
With new memory fab spending starting in 2024 it is likely by sometime in 2026 or at least by 2027 we will experience a glut of memory production, even with the growing demand of AI and there will be significant contraction in memory pricing.
In other words, the current trend of increased prices for HDDs and likewise for other storage and memory products, such as NAND flash and thus SSDs and DRAM, could be a short-term trend with a possible correction to more historical growth rates, likely by sometime in 2026.
