The cryptocurrency Chia has had a significant impact on the hard drive market. SSD demand doesn’t seem to have risen the same way, but both Western Digital and Seagate are reporting significantly higher demand. That’s according to executives from both companies, who spoke at a pair of separate events. Seagate CFO Gianluca Romano presented at the Bank of America Merrill Lynch 2021 Global Technology Conference, while Western Digital CFO Bob Eulau and VP Peter Andrew attended the Stifel 2021 Virtual Cross Sector Insight Conference (transcripts linked via SeekingAlpha).
According to Seagate, the boom in demand has helped it keep its factories full. Apparently, the hard drive industry added too much capacity in the last few years and the increased demand is filling manufacturing lines that would otherwise go idle.
Folks, we’ve finally done it. Nine months into the semiconductor shortage, we’ve managed to identify two top-tier hardware companies with manufacturing capacity to spare. According to Seagate, it is evaluating the likely long-term impact of Chia and planning additional CapEx spending to meet demand and fill product needs. The company expects overall hard drive prices to improve.
Eulau provided additional information on how WD sees these trends at the Stifel event. According to him, the Chia network was roughly 1EB (Exabyte) at launch. It’s currently 20EB. Both Western Digital and Seagate are seeing increased demand and revenue as a result; Seagate specifically mentions that this is an industry-wide uplift.
Seagate recently launched its dual actuator drives, which improves IOPS at a given capacity.
Western Digital notes that it is currently reorganizing its NAND flash business and its hard drive business into two separate units. WD’s purchase of SanDisk has not been a net positive for the company — Western Digital in 2021 is worth less than WD + SanDisk were worth separately — but the company executives believe a reorganization is key to changing that situation. The company argues that NAND and HDDs are actually complementary rather than cannibalistic. This does not apply to the consumer market, where SSDs have largely replaced hard drives, but WD claims that it does apply to cloud computing companies, hyperscalers, and data centers more generally.
According to Western Digital, its BiCS5 technology, with 112 layers, actually performs more like the 128-layer products built by its competitors. WD says being able to increase bit density is more important than pushing the number of layers inside the product. The company has at least a theoretical point; the deeper the number of layers, the harder it is to etch the trench. This is why most high-layer SSDs today are built from two NAND stacks as opposed to etching a single trench that’s 176-192 levels deep. Fewer layers with higher density can be a good thing, assuming it doesn’t add too much complexity of its own.
In HDD-specific news, Western Digital expects to rapidly ramp up production of its 18TB drives. Western Digital continues to refer to its manufacturing as “energy-assisted” rather than specifying if its drives use HAMR (Heat Assisted Magnetic Recording), MAMR (Microwave Assisted Magnetic Recording), or something altogether different.
Western Digital continues to invest in both HAMR and MAMR, but says it will bring the technologies to market “when it makes commercial sense to do so.” This year, the company’s focus is on boosting profitability and cutting expenses. Neither WD nor Seagate has any near-term plans to build new hard drive factories. Both companies are wary of investing in new production right now given long-term trends in storage. Seagate had unused production lines already, until Chia hit.
So long as Chia stays confined to hard drives, the consumer storage market will be fine — at least, assuming you don’t need multiple 16-20TB HDDs. Both companies are enthusiastic about Chia, so we’ll see how demand shapes up long term.
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