Nearline HDD Demand and Capacity Upgrades Drive TDK Head Share Gains

Overview

Based on 2Q26 data released by Techno Systems Research, JPMorgan tracks shipment trends for HDD systems and key components. The report believes that nearline HDD demand, rising capacity per drive, and more heads per drive are jointly driving industry value growth, and it is positive on TDK's expanding share in HDD heads.

Core views

Total HDD shipments were flat QoQ but resumed YoY growth, driven primarily by nearline HDDs. The higher capacity and head configuration of nearline products drove HDD shipment value up 47% YoY, significantly faster than shipment volume. TDK began supplying two vertically integrated manufacturers in 1Q26 and further expanded supply for nearline applications in 2Q; the report judges that constraints on traditional head capacity expansion at vertically integrated manufacturers, along with the shift of existing capacity toward HAMR, are favorable for TDK to gain further share.

Analysis framework

Using TSR quarterly shipment data, the analysis compares YoY and QoQ changes in HDD systems, nearline HDDs, spindle motors, and HGA heads, while combining capacity per drive, heads per drive, market share, and per-GB costs to assess changes in industry structure.

Methodology notes

• Industry Data TrackingQuarterly Shipment and Share Analysis

  Assess supply-demand conditions and changes in industry value through shipment volume, shipment value, capacity, unit pricing, and market share.

  The report identifies nearline HDDs as the principal growth driver and combines heads per drive with TDK's expanded supply to assess its path to market-share gains.

• Cost Competitiveness AnalysisPer-GB Cost Comparison

  Compare unit-capacity cost differences between nearline HDDs and NAND flash.

  Nearline HDD cost per GB is $0.014, and the NAND-to-nearline HDD per-GB cost gap widened to 19.2x, reinforcing the economics of HDDs for high-capacity storage.

Asset mapping & comparison

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

• TDK (6762)

  HDD head supplier and the report's preferred pick

  Strengths

  Head shipment growth outpaces the industry, with share rising to 14.6%; supplies to two vertically integrated manufacturers are expanding, and it benefits from rising nearline HDD head counts.

  Weaknesses

  Highly dependent on HDD industry demand, customer adoption, and supply expansion.

  Comparison

  Versus vertically integrated manufacturers, the report believes their traditional HDD head capacity expansion is constrained and some capacity is shifting to HAMR, creating an opportunity for TDK to gain share.

  Risks

  Weaker-than-expected nearline HDD demand, changes in customer qualification or procurement timing, HAMR transition progress deviating from expectations, and vertically integrated manufacturers restoring or expanding traditional head capacity.

• Nidec (6594)

  HDD spindle motor supplier

  Strengths

  Spindle motor market share was 60.1% in 2Q26.

  Weaknesses

  Spindle motor shipment growth was slower than HGA head growth.

  Comparison

  Together with MinebeaMitsumi, it forms the principal supply structure; the latter held 39.9% share.

  Risks

  Weak HDD system shipments or changes in supply-chain share.

• MinebeaMitsumi (6479)

  HDD spindle motor supplier

  Strengths

  Spindle motor market share was 39.9% in 2Q26.

  Weaknesses

  Market share is lower than Nidec's.

  Comparison

  Nidec held 60.1% share, and the industry is concentrated among two suppliers.

  Risks

  Changes in HDD system shipments and customer mix.

Key data

• Total HDD Shipments (2Q26)33.0 million unitsUp 9% YoY and flat QoQ.
• Nearline HDD Shipments19.1 million unitsUp 16% YoY and 2% QoQ.
• HDD Shipment Value$7.939 billionUp 47% YoY and 14% QoQ; nearline HDDs accounted for $6.912 billion.
• HDD Shipment Capacity504EBUp 29% YoY and 6% QoQ; average capacity per drive was 15.3TB.
• HGA Head Shipments415 million unitsUp 19% YoY and 3% QoQ; averaging 12.6 heads per HDD.
• TDK HGA Head Shipments and Share60.6 million units; 14.6%Shipments rose 34% YoY and 15% QoQ, with share increasing from 13.0% a year earlier.
• Nearline HDD vs. NAND Per-GB Cost Gap19.2xAbove 4.8x in 2Q25 and 12.0x in 1Q26, reaching a record high.
• Toshiba HDD Shipment Value$873 millionUp 55% YoY and 5% QoQ.

Impact & implications

Capacity upgrades in data center nearline HDDs are causing industry revenue and component demand to grow faster than HDD system shipments. For head suppliers, rising heads per drive amplifies unit demand from nearline HDD growth; if TDK continues expanding supply to vertically integrated manufacturers, it may continue to benefit from market-share gains.

Risks

• Nearline HDD demand or cloud-provider capital expenditure may be weaker than expected.
• Changes in NAND pricing or costs could narrow HDDs' unit-capacity cost advantage.
• The pace of HAMR technology adoption, yields, or capacity conversion is uncertain.
• The scale of TDK's supply to vertically integrated manufacturers and its share gains may fall short of expectations.
• The HDD industry is highly concentrated; customer procurement and supply-chain adjustments may amplify earnings volatility.
• JPMorgan discloses conflicts of interest with TDK, including market making, client relationships, compensation from non-investment-banking services, and potential investment-banking compensation.

What to watch

• The sustainability of quarterly nearline HDD shipments, shipment value, and average capacity per drive.
• Changes in heads per HDD and heads per nearline HDD.
• Expansion of TDK's supply to two vertically integrated manufacturers and changes in market share.
• The pace at which vertically integrated manufacturers convert traditional head capacity to HAMR.
• The subsequent evolution of the per-GB cost gap between NAND and nearline HDDs.
• Shipment value and product mix at Toshiba and other HDD manufacturers.