Western Digital has announced it has completely sold out of hard disk drive capacity, with CEO Irving Tan revealing that the company has secured major AI and enterprise deals through 2028. Consumer business now accounts for a mere 5% of total revenue, while cloud and enterprise clients dominate at 89%.
During the Q2 earnings call, Tan disclosed that Western Digital is sold out for calendar year 2026, with firm purchase orders from its top seven customers. The company has also established long-term agreements with two customers extending into 2027 and one customer through 2028.
“As we highlighted, we’re pretty much sold out for calendar 2026. We have firm POs with our top seven customers. And we’ve also established LTAs with two of them for calendar 2027 and one of them for calendar 2028. Obviously, these LTAs have a combination of volume of exabytes and price”.
– Irving Tan, Western Digital’s CEO
AI’s Insatiable Appetite for Storage
The surge in demand stems from artificial intelligence’s massive data requirements. Cloud service providers rely heavily on HDDs as a cost-effective and efficient storage solution versus solid-state drives, particularly for exabyte-scale data centers needed for AI operations. This includes scraped web data, processed data backups, inference logs, and numerous other AI-related storage needs.
The capacity shortage follows earlier warnings about HDD market pressures, with prices already surging to two-year highs driven by demand from the United States and China .
What This Means for Average Consumers
The shift toward enterprise and AI clients leaves everyday consumers facing potential challenges. With just 5% of Western Digital’s revenue coming from its consumer products, the availability of affordable HDDs for personal computers, external storage, and home use could become increasingly limited.
Consumers may experience higher prices, longer wait times, or limited product selection as manufacturers prioritize enterprise contracts over retail markets.
Frequently Asked Questions (FAQ)
Q: Why has Western Digital run out of HDD capacity?
A: The company has secured massive deals with enterprise and AI customers that have consumed all available production capacity through 2026 .
Q: How much of Western Digital’s business is consumer-focused now?
A: Consumer revenue accounts for only 5% of total revenue, while cloud and enterprise make up 89% .
Q: What long-term agreements has Western Digital established?
A: The company has long-term agreements with two customers through 2027 and one through 2028, covering volume and pricing commitments .
Q: Why do AI companies prefer HDDs over SSDs?
A: HDDs offer a more cost-effective and efficient storage solution for the massive exabyte-scale data requirements of AI operations .
Q: How will this affect HDD prices?
A: Prices have already surged to two-year highs, and the capacity shortage may drive costs even higher for consumers .
Emman has been writing technical and feature articles since 2010. Prior to this, he became one of the instructors at Asia Pacific College in 2008, and eventually landed a job as Business Analyst and Technical Writer at Integrated Open Source Solutions for almost 3 years.
