Storage Market Under Pressure
What's creating the cost rise?
Hendrik Christ
AI workloads are tightening nearline HDD supply and prices are increasing. The outlook for TLC and QLC SSDs is uncertain. Is AI the main driver, or are broader market dynamics at play?
As more and more companies are stepping up their AI investments, the demand for hardware is also increasing.
GPU prices are already in the tight grip of current shortages, and even older graphic cards hold der value remarkably well. In recent months, storage has also been caught up in this AI craze.
Specifically HDDs, where costs have increased dramatically. NAND has already increased by 15 percent in 2024 and right now many models are backordered for up to 12 months. In September 2025, Western Digital, for example, has increased their prices for another 10 percent.
For IT administrators, this means longer lead times on high-capacity drives. Storage management and disk cleanup become more important.
But is AI the only reason for the demand? A look at the current market might be enlightening not only for the current situation, but also for the future of the market.
What is tightening the market?
There seem to be four key reasons for the current situation:
- Demand shock from AI
- Manufacturer supply restraint
- Increased shipping costs
- Tariff wars between the USA and China
We will look at each reason individually.
Demand shock from AI
The most obvious reason is that the IT industry is in a hurry right now.
AI didn’t come out of nowhere, but the sudden developments have made it usable on a large scale.
Most companies weren’t ready to use AI effectively and therefore they have increased their hardware budgets. No one wants to be left behind in a new digital revolution.
Training and inference expand datasets and logs, which need a lot of disk space. Nearline HDDs are the best price per capacity if there is a need for bulky storage.
But with low supply of HDDs, SSDs become the focus of the companies. Rather than completely replacing HDDs, SSDs are used next to existing HDDs. For consumers there is at least a sliver of hope.
While companies have a need for Quad-Level Cell SSDs, due to their high storage space at the cost of less performance with a full SLC-cache and reduced lifetime, most private users prefer Triple-Level Cell SSDs, which are a bit more expensive but at better performance.
With increased demand, manufacturers are already increasing their prices. It is projected that these increases will spill over to other NAND storage drives.
Manufacturer supply restraint
But high demand alone is not always an issue. If there is a lot of production, prices can be stable. Here lies the problem.
For years, the manufacturers have seen a decline in HDDs and an increase in SSDs sales. This led them to cut their production but more importantly their capacities.
This in turn means that manufacturers are ill-prepared for the sudden spike in demand and that they lack supply elasticity in the coming years.
On top of the cuts, manufacturers also changed how they ship and price their drives. They set stricter minimum orders, reduced the number of models, and gave first pick to the biggest cloud buyers.
That leaves the channel and mid-sized customers with significantly longer waits, higher list prices, and even fewer alternatives. Even spare parts are tighter, so repairs take longer and the refurbished market heats up.
And because new production lines take months to ramp, supply can’t quickly catch up, making the crunch feel largely self-made.
Increased shipping costs
Not everything lies in the hands of the manufacturers. While in the past a lot of hard drives have been flown in via air mail, this has changed.
The prices for fuel and operating costs are too volatile to make a consistent budget, all the while taxes for aviation increases. Germany has increased its aviation tax to 24 percent in May ‘24.
The public image also plays a role. Aviation has the image of being environmentally unfriendly, which is also the reason for an unstable outlook for the future. Many countries will increase their taxes for this reason.
The main transportation method is via ship. But that is also problematic for many reasons:
- Many parts come from China, which is in a tariff war with the USA. The latest part was a tariff increase for Chinese ships in US ports in April ‘25 and China retaliated in October ‘25.
- The fuel cost for ships and environmental taxes and regulations are big concerns.
- Some freight routes are facing geopolitical uncertainty, like the Red Sea, the Panama Canal or the South Chinese Sea.
- Increased consumer demands while not enough cargo ships are operational.
- Container shortages reduces available cargo.
This will no doubt lead to many price increases and supply chain delays, which will unfortunately be forwarded to the consumers.
Tariff war between the USA and China
The tariff war between the USA and China is not only limited to port tariffs.
The Biden administration expanded import tariffs increasing prices of semiconductors from China up to 50 percent. While a lot of suppliers already manufacture outside of China, these tariffs also tighten an already pressured market.
Originally these should be reviewed in 2025, but it is unlikely that the Trump administration will discontinue this tariff.
From import tariffs for all goods from China to more specific tariffs on HDDs and SSDs – the Trump administration seems ready to fight a trade war with China.
But this could also be bad news for suppliers from Thailand, Malaysia and Taiwan. The current US government has made it clear that they aspire to reduce trade imbalances and strengthen local manufacturing.
This could spell disaster for price developments in the US. And these effects might send ripples which impact even other markets like the EU.
In the past, lower margins in the domestic market of US companies have led to price increases in other parts of the world.
All in all, it seems very likely that the storage market will remain under pressure, at least in the short- to midterm.
Where will companies go from here?
An old proverb says that a problem which can be solved with money is no problem and for a lot of companies this might be the way to go. Paying ever-increasing costs is one solution. But there are better solutions to this problem.
The main solution is to better handle the existing data structures and delete unnecessary space hogs like duplicates or outdated files.
Doing this without supporting software might be a struggle, even seasoned system administrators might find the task daunting to free up vast amount of storage space.
It combines a professional toolset to analyze used disk space, clean up duplicates and eliminate space hogs..
Start a free trial today and free yourself from the struggling storage market.