JPMorgan: Strong Storage Demand in April, TDK Named Top Pick for HDD Components

Overview

JPMorgan released its tracking report on HDD and SSD shipment data for April 2026. The data shows that although overall HDD shipments declined slightly MoM, capacity output for nearline HDDs and enterprise SSDs maintained strong YoY growth, driven by data center construction. Based on its view of the 'high-capacity' trend in the storage market, the firm reiterated its investment thesis on HDD electronic component manufacturers and named TDK (6762.T) as its top pick in the sector.

Core views

The nearline HDD market performed steadily, showing clear characteristics of 'stable volume and rising value.' In April 2026, nearline HDD production was 6.8 million units (-1% MoM, +14% YoY), and its capacity output reached 154.8EB (+1% MoM, +31% YoY). The firm noted that as major drive manufacturers actively secure nearline components and pass optimistic production plans upstream, demand for nearline HDDs remains high. In terms of product mix, the production of high-capacity nearline HDDs such as 26TB, 28TB, and 32TB is gradually increasing, with the average capacity per unit reaching 22.8TB in April (+15% YoY), indicating that massive growth is primarily driven by the increase in per-drive capacity. Enterprise SSDs are experiencing explosive growth with accelerating technological iteration. In April, capacity output for enterprise/data center SSDs reached 37.7EB, a significant 117% YoY increase and a 2% MoM increase. Although total SSD shipments are leveling off, growth measured by capacity is extremely rapid. Technologically, the average capacity of enterprise SSDs has reached 6.6TB (+53% YoY). More notably, with the full introduction of ultra-high-capacity products like 122.88TB and 245.76TB, the trend of SSDs evolving toward higher capacities is irreversible. As of April, the share of SSDs in total data center and server storage capacity has risen to 19.5%, demonstrating their continued penetration in replacing traditional HDDs. At the company level, the firm names TDK as its top investment pick in the HDD electronic component manufacturing sector. The core logic lies in the changing competitive landscape: major captive manufacturers are currently curbing the expansion of traditional HDD head production capacity and shifting existing capacity to Heat-Assisted Magnetic Recording (HAMR) technology. This strategic adjustment opens up room for market share gains for non-captive external suppliers like TDK, positioning them to capture more advantageous business increments.

Analysis framework

This report adopts a methodology of 'high-frequency data tracking + supply chain transmission analysis.' First, using authoritative industry data from TechnoSystems Research (TSR), it breaks down the prosperity of the storage market from two dimensions: 'shipments (Units)' and 'capacity (Capacity/PB),' with a particular focus on marginal MoM changes and long-term YoY trends. Second, by observing the structural differentiation of products with different specifications (e.g., nearline vs. enterprise, high-capacity vs. low-capacity), it assesses the true strength of downstream data center demand. Finally, combining the capacity game and technology route shifts (e.g., HAMR) between upstream component manufacturers (like TDK) and downstream complete machine manufacturers (captive manufacturers), it deduces the logic behind market share changes for component suppliers, thereby completing a closed-loop analysis from macro industry data to micro stock selection.

Methodology notes

• Industry/Supply Chain Analysis FrameworkUpstream, Midstream, and Downstream Supply Chain Transmission

  Upstream, Midstream, and Downstream Supply Chain Transmission

  The report mentions that drive manufacturers (downstream) proactively submit aggressive procurement and production plans to component manufacturers (upstream). This process of transmission from end-demand (data center construction) to upstream component links is a key method for judging supply chain prosperity and order visibility.

• Industry/Supply Chain Analysis FrameworkVolume and Price Breakdown

  Volume and Price Breakdown

  The firm looks not only at the number of SSD/HDD units shipped (volume) but also places greater emphasis on capacity measured in EB/PB (price/capacity). In the storage industry, due to the rapid increase in per-drive capacity, 'flat volume but rising value' is the norm. Breaking down volume and capacity is necessary to accurately assess the true growth rate of the market size.

Asset mapping & comparison

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

• TDK (6762.T)

  HDD electronic component manufacturer, benefiting from capacity spillover and technological transition of captive manufacturers

  Strengths

  Named as the top pick in the HDD component sector by the firm; captive manufacturers are curbing traditional head capacity due to the shift to HAMR technology, which benefits market share gains for external suppliers

Key data

• Nearline HDD Capacity YoY Growth+31%Reached 154.8EB in April, reflecting strong data center demand
• Enterprise SSD Capacity YoY Growth+117%Reached 37.7EB in April, with ultra-high-capacity products beginning to ramp up
• Average Capacity per Nearline HDD Unit22.8TB+15% YoY, continuing the trend toward higher capacities
• SSD Share of Total Storage Capacity19.5%Significant increase from 12.8% in April 2025
• TDK Current Stock Price3,849 JPYData as of market close on June 2, 2026
• TDK Target Price3,200 JPYMaintains Overweight rating

Impact & implications

For storage component manufacturers, the urgent demand from data centers for high-capacity, high-density storage means the industry is shifting from simply 'competing on volume' to 'competing on technology and yield.' For suppliers with stable supply capabilities like TDK, the adjustment of downstream OEMs' capacity structure (shifting to HAMR) provides a strategic window to capture market share. However, this also requires suppliers to possess the R&D and delivery capabilities to handle high-technical-barrier products (such as high-capacity heads).

Risks

• The technological transition progress of captive manufacturers falls short of expectations, leading to delayed order releases for external suppliers like TDK.
• The pace of SSD substitution for HDDs exceeds expectations, compressing the long-term market space for nearline HDDs.

What to watch

• The specific pace at which captive manufacturers shift capacity to HAMR technology and its impact on traditional head procurement
• The mass production progress of 122.88TB and 245.76TB high-capacity SSDs and their reshaping of the storage market landscape
• The sustainability of nearline HDD capacity output in subsequent months