It is reported that the delivery deadline has been extended to more than 2 years, and major cloud service (CSP) manufacturers in North America and China have "urgently added orders" to purchase large-capacity enterprise-grade solid-state drives (SSDs). Some original QLC NAND Flash production capacity in 2026 has also been sold out in advance, and the industry expects that as soon as 2027, global QLC bits may overtake TLC NAND.

The focus of AI development has shifted to inference, relying on high-performance and large-capacity storage devices, and multiple data centers in North America have been completed one after another.

Due to the concentration of HDD supply and the adoption of the "production to order" model, the shortage continues to intensify, and it is reported that CSP companies have signed long-term contracts with suppliers in 2026 to lock in the supply source of HDDs and enterprise-level SSDs in advance.

Recently, major HDD manufacturers such as Seagate have raised their revenue and profit targets. However, the industry pointed out that the two major HDD companies have not actively released capital expenditure targets, among which Seagate is expected to increase annual capital expenditure by 5%, mainly hoping to increase shipment supply through technological upgrades, while Western Digital has not yet put forward a clear target and maintains a cautious attitude towards expanding production.

According to the analysis of memory people, although the shortage of HDDs at this stage is not directly related to the issue of rare earths, rare earths are still one of the key raw materials for manufacturing HDDs, and the control variables of rare earth exports in the future may affect the supply of HDDs to face more uncertainties.

As the shortage of HDDs intensifies, although the price difference between SSDs and HDDs is as high as 3~4 times, CSP operators have to increase the purchase of high-capacity enterprise-level SSDs.

The procurement needs of major North American CSP manufacturers in 2024 are mainly TLC NAND, but now the storage specifications have shifted to 128~256TB QLC SSD, although the NAND manufacturer is actively increasing the allocation of QLC production capacity, but the current original factory is stable to provide a single 2Tb particle shipment is limited, for example, a 256TB SSD will need to be matched with 32x32 2Tb particles.

As for Chinese manufacturers, they only realized the shortage of HDD supply in the second quarter, and due to the inability to obtain HDD capacity allocation, the demand for SSD capacity has also doubled, from the common 8TB/16TB SSD in the past to purchasing higher capacity 64TB/128TB SSDs to replace them.

Due to the urgent demand in the server markets in North America and China, the supply of QLC SSDs still cannot fully make up for the HDD gap, and the original QLC NAND production capacity in 2026 has also been emptied in advance.

According to the estimates of CFM, a Chinese market research agency, the price increase of enterprise-grade SSDs and NAND particles in the fourth quarter will exceed 20%, and the quotation increase of some enterprise-level SSDs will be as high as 30~40%. and the bit demand for enterprise SSDs in servers in 2026 is expected to increase by nearly 50% compared to 2025.

It is reported that Micron's current quotation model has been shortened from quarterly bargaining to "weekly bargaining", and Kioxia (Kioxia) is directly telling customers that it is out of stock, and the production capacity of Samsung Electronics' NAND factory in Xi'an is currently in the transition period from V6-NAND to V8-NAND.

In addition, some NAND manufacturers have strategically reduced production by about 10~15% from the end of 2024, and the NAND production line has not yet returned to full load operation.

Silicon Motion General Manager Gou Jiazhang said that HDD, NAND Flash, and DRAM are facing simultaneous supply shortages for the first time, and prices have continued to rise in the past three quarters, and are expected to continue until at least 2026.

In particular, the price of NAND is rising, the cost of terminal applications is increasing, and the supply growth of QLC NAND will be more important, whether it is smartphones or enterprise-level SSDs, the penetration rate will continue to grow, and the market expects that QLC NAND is expected to become mainstream by the end of 2028, but due to market drivers, the global QLC bits will surpass TLC NAND as soon as 2027~2028.

In recent years, QLC NAND yield has improved, and high-stack layer technology has been introduced, resulting in more cost advantages, and the next-generation PLC NAND can achieve 5 bits of storage per cell, further increasing storage density. The industry believes that PLC reliability and lifespan will also face greater challenges, but it is expected that some products may begin to be introduced in 2027~2028.