Nearline disk drive shipments stall in calendar Q2

HDD storage
HDD storage

A report from research house TrendFocus shows growth in nearline disk unit shipments is essentially flat year-on-year while capacity shipped is growing only slightly.

Total hard disk drive (HDD) unit ships for the three months from April to June were between 44.3 million and 46.5 million, 45.4 million at the mid-point, and this would represent a 33 percent year-on-year decline, and a 14 percent quarter-on-quarter decline.

Nearline HDDs were the largest category, with 19 million shipped in the quarter compared to the 19.31 million shipped a year ago and 18.8 million shipped in 2022’s first quarter.

Wells Fargo analyst Aaron Rakers estimates that nearline HDD capacity shipped, assuming a 13.4TB average drive capacity, was up about 5 percent year-on-year. This is well down on the first quarter’s nearline HDD capacity growth, which, at 13.1TB average drive capacity, represented growth of 28 percent year-on-year.

All other disk drive categories had negative unit shipment growth in the second quarter:

  • Mission-critical: 2.5 million unit, down 27 percent year-on-year
  • 2.5-inch mobile/consumer electronics: 11 million units, down 40 percent quarter-on-quarter
  • 3.5-inch desktop/CE: 13 million units, down more than 30 percent quarter-on-quarter

The overriding reason for the declines in the non-nearline drive space was customers buying SSDs instead of HDDs. TrendFocus said there were weaknesses in the surveillance, PC, and retail markets for 3.5-inch desktop and consumer electronics (CE) drives. The PC market has largely moved to SSDs and retail sales of both 2.5-inch and 3.5-inch HDDs were weak.

This data suggests that Seagate, Western Digital, and Toshiba will report weaker Q2 disk revenues. We know that Qumulo has not grown as much as it hoped so far this year, which led to an 80-person layoff, StorCentric has filed for Chapter 11 bankruptcy protection, and Micron is forecasting a downturn.

That makes four negative data points about the health of the storage hardware market since the start of June. It could be a temporary blip caused by the pandemic, Chinese economic and supply chain difficulties, and the Ukraine war. Alternatively, these could be early signs of a coming recession.

The three HDD supplier unit ship shares are estimated to be:

  • Seagate: 44.5 percent (43.6 percent in Q1)
  • Western Digital: 37.2 percent (37.4 percent in Q1)
  • Toshiba: 18.3 percent (19.0 percent in Q1)