Nearline HDD and enterprise/data center SSD capacity continue high growth; TDK remains JPMorgan's top pick

Overview

This report tracks HDD and SSD production data for May 2026, focusing on data center-related nearline HDDs and enterprise/data center SSDs. The report believes that although overall SSD shipments are plateauing, capacity output is still growing rapidly due to higher capacities; demand for nearline HDDs is also supported by both large hyperscalers and small and mid-sized cloud service providers.

Core views

The core view is that storage demand is shifting from simple unit growth to capacity growth. For nearline HDDs, demand for 24TB, 28TB, 30TB, and 32TB+ models is solid, and capacity output remains strong year over year. For SSDs, capacity growth for enterprise/data center SSDs far exceeds unit growth, with particularly strong demand for 61.44TB, 122.88TB, and 245.76TB products. TDK, as the top pick among HDD electronic component makers, continues to be viewed positively for its medium- to long-term earnings growth story.

Analysis framework

The report uses TSR monthly HDD and SSD shipment data to compare production volume, capacity output, average capacity per drive, and year-over-year and month-over-month changes, while combining enterprise HDDs, nearline HDDs, and enterprise/data center SSDs to observe changes in the data center storage capacity mix.

Methodology notes

• Industry data trackingTSR HDD/SSD shipment and capacity data

  Production volume and capacity output

  Observing HDD and SSD demand through both unit counts and EB capacity helps avoid underestimating growth driven by upgrades to higher-capacity products when looking only at shipment volume.

• Product mix analysisTrend toward higher capacities

  Increase in average capacity per drive

  The increase in average capacity for nearline HDDs and enterprise/data center SSDs is the main explanatory variable for why capacity output growth exceeds unit growth.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• TDK (6762.T)

  The report's preferred HDD electronic components name, rated OW.

  Strengths

  Benefits from nearline HDD capacity growth, the HAMR transition, and potentially rising share among non-captive customers; its medium- to long-term earnings momentum is viewed positively.

  Weaknesses

  It may face short-term pressure relative to MLCC peers, and demand for HDD electronic components still depends on the pace of data center capital expenditure.

  Comparison

  The report compares TDK on a relative basis with MLCC stocks such as Murata Manufacturing and Taiyo Yuden.

  Risks

  A slowdown in nearline HDD demand, a weaker-than-expected HAMR transition, changes in customers' captive supply strategies, or delayed earnings improvement after FY2027.

• Nearline HDD

  One of the core storage formats driving data center capacity growth.

  Strengths

  In May 2026, capacity output grew 31% YoY and 5% MoM, with active demand from both large hyperscalers and small and mid-sized cloud service providers.

  Weaknesses

  There was stagnation from February to April, indicating that the short-term pace may fluctuate.

  Comparison

  Compared with overall HDDs, nearline HDD is the main subsegment sustaining growth.

  Risks

  Changes in cloud vendors' procurement pace, faster SSD substitution, or slower-than-expected ramp-up of high-capacity HDDs.

• Enterprise/data center SSD

  The fastest-growing storage subsegment in capacity terms.

  Strengths

  In May 2026, capacity output rose 139% YoY and 10% MoM, with particularly strong demand for high-capacity SSDs.

  Weaknesses

  Overall SSD unit shipments have already plateaued, so growth mainly depends on capacity upgrades.

  Comparison

  SSD's share of combined enterprise/data center capacity rose to 20.3%, significantly higher than 12.2% in May 2025.

  Risks

  Fluctuations in high-capacity SSD demand, the pace of QLC product adoption, pricing pressure, or a slowdown in enterprise data center procurement.

Key data

• May 2026 HDD production11.3 million units, +7% YoY, +1% MoMHDD production rose slightly month over month, with a mildly upward trend line.
• May 2026 nearline HDD production7.1 million units, +15% YoY, +4% MoMNearline HDD is the only HDD form factor maintaining a growth trend.
• May 2026 HDD capacity output176.0EB, +29% YoY, +4% MoMOf this, nearline HDD accounted for 162.4EB, +31% YoY and +5% MoM.
• Average capacity per nearline HDD drive23.0TB, +14% YoY, +1% MoMReflects a higher mix of 24TB, 28TB, 30TB, and 32TB+ products.
• May 2026 SSD production29.6 million units, -1% YoY, +1% MoMOverall SSD shipments are trending toward a plateau.
• Enterprise/data center SSD production5.8 million units, +46% YoY, +3% MoMEnterprise/data center SSD unit shipments are still growing clearly.
• Enterprise/data center SSD capacity output41.4EB, +139% YoY, +10% MoMGrowth in capacity terms is significantly higher than growth in unit terms, reflecting strong demand for high-capacity SSDs.
• Average capacity per enterprise/data center SSD drive7.1TB, +64% YoY, +7% MoMDemand for 61.44TB, 122.88TB, and 245.76TB SSDs is described as unprecedented.
• Combined capacity of enterprise HDD, nearline HDD, and enterprise/data center SSD204.1EB, +44% YoY, +6% MoMSSD capacity share rose to 20.3%, up from 19.5% in April 2026 and 12.2% in May 2025.

Impact & implications

For investors, data center storage demand continues to support the HDD and SSD supply chains, but the investment focus should shift from shipment units to capacity, product specifications, and supply chain share. TDK benefits from the medium- to long-term logic related to HDD heads and the HAMR transition, but its short-term performance may fluctuate relative to MLCC peers such as Murata Manufacturing and Taiyo Yuden.

Risks

• HDD or SSD capacity growth falls short of the trend reflected in TSR monthly data.
• The pace of storage procurement by data centers and cloud service providers slows.
• Demand for high-capacity nearline HDDs or enterprise/data center SSDs declines.
• TDK underperforms expectations in the HAMR transition, customer share gains, or earnings improvement after FY2027.
• J.P. Morgan discloses conflicts of interest including market making, client relationships, and potential investment banking compensation involving TDK or related entities.

What to watch

• Subsequent monthly changes in TSR HDD and SSD shipments, capacity output, and average capacity per drive.
• The sustainability of demand for 24TB, 28TB, 30TB, and 32TB+ nearline HDDs.
• Whether demand for 61.44TB, 122.88TB, and 245.76TB enterprise/data center SSDs continues.
• The speed of QLC design penetration in high-capacity SSDs.
• Changes in SSD's share of total enterprise/data center storage capacity.
• TDK's HAMR capacity migration, HDD head share, and earnings momentum after FY2027.