HDDs Down In 2022 But Expected Recovery Starting In 2023

This article contains information on the C4Q 2022 hard disk drive industry from the most recent Digital Storage Technology Newsletter.

Although HDD shipments in units and exabytes were down again this quarter, the decline was less severe than in C3Q 2022 (5.4% lower on unit shipments and 21% lower on exabyte shipments). This continues the decline in quarterly HDD shipments that started in C1Q 2022. The continued decline in C4Q 2022 was driven by decreasing nearline HDD shipments. But both Seagate and Western Digital indicated that they expected HDD exabyte shipments to trend up by the second half of 2023.

Seagate said that they shipped 96.7EB of mass capacity hard disk drives with 79.7EB of this being in nearline HDDs. They shipped 15.8EB of legacy HDDs. The average drive capacity of mass capacity HDDs was 11.9TB and the average drive capacity for legacy HDDs was 2.2TB. Seagate’s overall capacity shipped was 112.5EB with an average capacity per drive of 7.3TB. Seagate’s HDD revenue in the quarter was $1,663M. The company said that over 60% of the Mass Capacity HDDs shipped in the December quarter were 20+TB and that by June 2023 it would be shipping HAMR HDDs with 30+TBs.

Seagate also expects to get traction in 2023 with the production launch of their heat assisted magnetic recording (HAMR) drives. In Seagate’s earnings call, CEO Dave Mosley said, “In the current market environment, we’ve been taking advantage of our reduced factory utilization to accelerate cycles of learning around HAMR productization. We are meeting or exceeding all product development milestones and reliability metrics, and we will be shipping prequalification units to key cloud customers in the coming weeks. As a result of this progress, we now expect to launch our 30-plus terabyte platform in the June quarter, slightly ahead of schedule.” Seagate believes that its HAMR introduction will give the company a multi-year advantage over their competition.

Western Digital reported that their C4Q 2022 total HDD EB shipments decreased by 35% from the prior quarter (I estimate this at 100.4EB). They also said that shipped client compute units were 4.0M, consumer shipped HDD units were 3.4M and data center (cloud) HDD unit shipments were 5.5M. Western Digital said that their ASP in the quarter was $99 (down from $125 in the prior quarter). Cloud storage represented 39% of Western Digital’s revenue in the quarter (down 10% from the prior quarter). WDC is seeing the strongest growth in the company’s shingled magnetic recording (SMR) nearline drives, including its 26TB UltraSMR drives.

David Goeckeler of WDC said, “Shipment of capacity enterprise drives based on SMR technologies exceeded 25% of this category, one quarter ahead of our expectations. We now expect SMR to represent over 40% of our capacity enterprise exabyte shipment exiting fiscal year 2023.” He also said that SMR adoption drove a 19% sequential and 21% year-over-year increase in average capacity to 17 terabytes per capacity enterprise drive in the last quarter.

There was a an 12.7% average sales price (ASP) decline from C3Q 2022 to C4Q 2022 following a 1.6% decline in C3Q 2022. The multi-year ASP trends are shown in the image below. The ASP decrease in C4Q 2022 was due to big ASP decreases at WDC (down 20.8%) and ASP decreases at Seagate (down 4.8%). Until mid-2022, the increasing percentage of more expensive mass storage enterprise HDDs led to an increase in HDDs ASPs since 2015, as legacy applications (e.g. storage for PCs and high performance enterprise HDDs have lost ground to SSDs).

The table below shows C4Q 2022 estimated Exabytes Shipped by company and general application. Note that per Seagate’s reports, Legacy includes PC, CE, Branded and enterprise applications. Also note that WDC only gives a change in total exabytes shipped for the quarter versus the prior quarter and Toshiba didn’t report other mass storage exabytes.

Total exabyte shipments in 2022 are shown below.

The pie chart below shows 2022 HDD market share (by units). Note that Toshiba gained a percentage market share from C3Q 2022 to C4Q 2022 at the expense of WDC.

The figure below shows some history and our projections for disk drive annual shipped capacity growth out to 2028. Because of the need for high-capacity HDDs in data centers we believe that shipping capacities will start to recover from their fall in 2022 by the second half of 2023.

The figure below shows history and our projections for shipped capacity of SSDs, HDDs and magnetic tape out to 2028. The drop in 2023 impacted HDDs, but also SSDs.

HDD unit and exabyte shipments were down again in C4Q 2022, but by less than in the prior quarter. Overall HDD unit and shipped storage capacity were 33.4% and 14.5% in 2022 compared to 2021, with the biggest drop in nearline HDD demand. With the growing amount of data being created and stored, we expect that the nearline HDD market will start to recover by the second half of 2023.