The data is in for the C2Q 2023 HDD shipments from the August 2023 Digital Storage Technology Newsletter.
Total HDD shipments in C2Q 2023 were down 6.8% compared with C1Q 2023 (31.2M versus 33.5M). This continues the downward trend since Q1 2022. Total exabytes shipped in C2Q 2023 were down about 19.3% from C1Q 2023. Total estimated HDD revenue in C2Q 2023 was about $3.27B (down about 13.5% from the prior quarter). All storage and memory companies have suffered from bad quarters since 2022 (it isn’t just HDDs).
Here are the actual reports from Seagate and Western Digital for C2Q 2023. First from Dave Mosley. “It will take another couple of quarters for inventory to be normalized at major enterprise and cloud customers. Development efforts on what may be our last PMR product are nearing completion and will extend drive capacities into the mid- to upper 20 terabyte range…Seagate is leveraging magnetic recording technology innovations such as HAMR across our mature 10 disk HDD platform, positioning us very well to meet increasing demand, including from data-intensive AI applications…
…Our 30-plus terabyte product launch plan is fully intact and initial customer qualifications are progressing well. We are on track to begin volume ramp in early calendar 2024. We are also preparing qualifications with a broader number of customers, including testing for lower capacity drives targeting VIA and enterprise OEM workloads…Looking ahead, we expect the macro end-to-end market conditions that we have flagged throughout fiscal 2023 to continue weighing on demand through at least December…For now, we are forecasting sales into China to remain relatively stable for the balance of the calendar year.”
Gianluca Romano said, for the June quarter, “we reported revenue of $1.6 billion, in line with our recent public commentary and non-GAAP loss of $0.18 per share, slightly better than the midpoint of our guided range. Total hard disk drive revenue declined 14% sequentially to $1.4 billion, with shipment of 91 exabytes. Mass capacity revenue declined 20% sequentially to $1 billion, reflecting softer demand in the cloud nearline market, partially offset by an improvement in the VIA business.
Shipment into the mass capacity markets totaled 75 exabytes compared with 104 exabytes in the March quarter. Mass capacity shipments as a percentage of total HDD exabytes was roughly 82% compared to the March quarter 88%. The expected slowdown in our cloud business led to nearline shipments of 55 exabytes, down 37% sequentially.
Within the legacy market, revenue was $401 million, up 8% sequentially, reflecting higher demand for mission-critical products. The client and consumer markets were down slightly quarter-over-quarter, typical for a June quarter.
Importantly, we shipped our first HAMR-based CORVAULT system for revenue as planned during the June quarter. We expect broader availability of these CORVAULT systems by the end of calendar 2023.
According to our September quarter outlook, for the hard drive business, we expect incremental improvements in mass capacity to offset declines in the legacy markets.”
Western Digital reported that their C2Q 2023 total HDD EB shipments declined by 18% from the prior quarter (I estimate this at 94.7EB) and that they had shipped 59EB of nearline storage. They also said that shipped 3.3M client compute units, consumer shipped units were 2.7M and data center (cloud HDD unit shipments) were 5.8M. That means the average capacity of their nearline HDDs was about 10TB. The company’s ASP was $99 (down from the prior quarter at $109). Cloud storage was about 37% of the company’s revenue in this quarter (compared to 43% in the prior quarter).
David Goeckeler of WDC said, “In HDD, we have successfully qualified our latest family of capacity enterprise hard drives at all major customers and are shipping our 26-terabyte UltraSMR drive in high volume. At the end of the fiscal fourth quarter, we have successfully qualified all variants of our 22-terabyte CMR and 26-terabyte UltraSMR hard drive platforms at all major cloud customers, setting the stage to improve shipments and profitability…In addition, we are about to begin product sampling of our 28-terabyte UltraSMR Drive. This cutting-edge product is built upon the success of our ePMR and UltraSMR technologies with features and reliability trusted by our customers worldwide. We are staging this product for quick qualification and ramp as demand improves.
In HDD, as we look to the fiscal first quarter, we expect overall demand to remain stable. Beyond the fiscal first quarter, we anticipate both improving demand and new product ramps to drive growth in revenue and profitability”
Wissam Jabre (WDC CFO) said, “In the fiscal fourth quarter, HDD revenue was $1.3 billion, down 13% sequentially and 39% year over year. Sequentially, total HDD exabyte shipments decreased 18%, and average price per unit decreased 9% to $99. On a year-over-year basis, HDD exabyte shipments decreased 38% and average price per unit decreased 17%.
Beyond the fiscal first quarter, we anticipate both HDD and flash revenue to improve through the remainder of fiscal year 2024 driven by normalizing demand in storage, as well as higher average content per unit in flash. Gross margin is expected to gradually improve driven by higher HDD volume and lower underutilization charges in both flash and HDD.”
We saw an 10.8% average sales price (ASP) decrease from C1Q 2023 to C2Q 2023 following a 6.1% increase in C1Q 2023. The multi-year ASP trends are shown in the image below. Until mid-2022, the increase in the 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 lost ground to SSDs). Continuing demand declines for nearline storage is driving ASPs down.
The estimated market share for C2023 to date is shown below.
The figure below shows out projections for total shipments of HDD storage capacity on an annual basis to 2028.
This figure assumes that HDDs can continue their areal density increases with the introduction of heat assisted magnetic recording, particularly HAMR starting in 2024. If this transition does not happen then new QLC SSD products could start to take significant market share from nearline HDDs in the near future, despite increasing flash memory prices in 2024 as supplies get closer to demand.
Total HDD shipments in C2Q 2023 were down 6.8% compared with C1Q 2023. Total exabytes shipped in C2Q 2023 were down about 19.3% from C1Q 2023. Total estimated HDD revenue in C2Q 2023 was about $3.27B (down about 13.5% from the prior quarter)
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