Hard drives were supposed to lose the storage war — but AI demand is now pushing their biggest suppliers years ahead
Toshiba plans to nearly double AI storage HDD capacity by fiscal 2027Toshiba is spending $380 million to expand Philippine HDD production capacityNew Toshiba drives could increase storage capacity by 40% per drive
Artificial intelligence is giving conventional hard drives an unexpected second wind, as data centers require enormous amounts of relatively affordable storage.
Toshiba is responding to this surge by investing 60 billion yen, or about $380 million, to expand its HDD manufacturing in the Philippines.
The company expects production capacity for AI and cloud storage drives to nearly double by fiscal 2027.
Toshiba prepares for the storage squeeze
The investment would become Toshiba's first major HDD expansion in roughly five years as the company responds to growing demand from AI infrastructure.
New production lines will be added, while Toshiba will also handle drives capable of storing up to 40% more data than existing products.
The company is additionally pursuing 65TB-class HDDs around 2030, followed later by models capable of reaching 100TB.
These higher-capacity products would allow Toshiba to supply more storage without requiring equivalent increases in drive quantities.
Toshiba currently holds slightly more than 10% of the global HDD market when measured by storage capacity, and the company is expanding because demand is strong.
Hard drives remain useful to Toshiba's expansion plans because their lower cost allows data centers to store enormous datasets without relying on expensive SSDs.
Though SSDs provide faster access, their prices run about 20 times higher than HDDs, making disks attractive where capacity matters more than immediate retrieval speed.
AI systems generate and retain substantial amounts of data, creating demand for storage that does not always require the performance associated with SSDs.
Rivals such as Seagate and Western Digital also face strong demand for their high-capacity drives from data center customers.
Seagate has reportedly allocated most of its nearline HDD capacity through 2028, with some customers discussing requirements extending into 2029 and beyond.
Western Digital has also committed much of its 2027 production, with some capacity for 2028 and 2029 already covered.
Toshiba scales production beyond capacity
Toshiba also plans to automate inspection activities and cleanroom operations at its Philippine facilities as production increases.
The company expects those changes to reduce additional staffing requirements by around 40% while also improving manufacturing yields.
Toshiba is not expanding in isolation, because suppliers of specialized HDD components are also increasing their manufacturing capabilities.
Nitto Denko plans to spend 28 billion yen (about $117 million) expanding CISFLEX production, with capacity expected to rise 40% by fiscal 2028 from fiscal 2025.
Nitto Denko controls more than 90% of the global market for the component used in HDD magnetic-head suspension assemblies.
Western Digital is separately planning about $1 billion of investment in Japan through 2030 for research, manufacturing technology, recruitment, and cooperation with universities.
For Toshiba, the immediate challenge is increasing supply quickly enough to capture AI-driven demand, and its long-term plan is to increase its market share to 30%.
