Demand for HDDs by AI companies has pushed prices up 20%, more hikes expected

Mike Powers
Demand for HDDs by AI companies has pushed prices up 20%, more hikes expected

In brief: We know that demand for all things AI-related has caused an increase in the price of certain hardware, especially GPUs and SSDs, but it’s also seen more companies buying large-capacity HDDs for their artificial intelligence needs. That’s led to a supply shortage of hard disk drives, which in turn is pushing up prices.

Joining the list of components being made more expensive by the AI revolution are HDDs. Western Digital, one of the largest drive and data storage companies, has already confirmed that both HDDs and SSDs are experiencing supply shortages.

Scott Davis, WD’s SVP of Channel and Regional OEM sales, this week advised customers in a letter (via TrendForce) that there will be price increases on flash and hard drive products this quarter, with some changes coming into effect immediately, as a result of higher-than-expected demand. The company warned customers in December to expect HDD price jumps throughout the first half of 2024.

Taiwan-based TechNews notes that overall HDD market prices have been increasing recently, rising between 10% and 20% from the third quarter of 2023 to the first quarter of this year. This is due to the high demand for large-capacity drives that are used for AI-powered servers and data centers. Smaller-capacity drives of 2TB and under have actually declined in price. The publication warns that average HDD prices are expected to continue rising by about 5% to 10% in the second quarter of the year.

Manufacturers themselves exacerbated the situation when they cut production by 20% in 2023 to try to stop the price of HDDs from crashing as the global economy struggled and demand for most products declined. However, the AI sector’s need for more HDDs became greater, meaning the prices went up instead of remaining stable. Not surprisingly, the companies aren’t in a hurry to restore production to normal levels as they want to continue reaping the rewards of higher prices.

The good news for consumers is that the prices mostly affect enterprise-grade HDDs rather than hard drives meant for home PCs. The Register does note, though, that many larger-capacity consumer HDDs on Amazon have seen their prices go up since Q3 2023. Prices for SSDs, both enterprise and consumer, have also increased.

Masthead: Pixabay

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