Crushing shortages have pushed long-term supply agreements for SSDs and HDDs to record five years — large customers are signing large contracts

Source: Tom’s Hardware

Image credit: Toshiba

In a world of rapidly developing artificial intelligence, the supply of computer hardware can barely meet demand, and long‑term supply agreements (LTAs) have become compulsory. For storage—both hard disk drives (HDDs) and solid‑state drives (SSDs)—LTAs now span three to five years, depending on the device. While some may argue that these agreements favor large customers, guaranteed offtake can ultimately benefit consumers.

Up to five year LTAs

“The duration of this agreement varies, with the longest contract extending to five years,” said Luis Visoso, chief financial officer of SanDisk, in an earnings call.
”In aggregate, volume commitments increased during the life of the contracts with quarterly commitments and a combination of fixed and variable pricing… These agreements are tailored to meet the needs of our customers and, in aggregate, provide us with demand certainty at financials that we expect will be consistent with our fiscal fourth‑quarter guidance.”

Similar dynamics apply to hard drives, though LTA visibility for Seagate and Western Digital is slightly shorter. Seagate is even discussing bespoke storage systems:

“We have exabyte‑scale supply agreements in place with nearly all major cloud and hyperscale customers, with near‑line capacity almost fully allocated through calendar 2027,” said William Mosley, CEO of Seagate.
”We are finalizing build‑to‑order contracts through the end of fiscal 2027, defining specific configuration and pricing. Our value‑based pricing approach enables customers to plan with confidence while contributing to sustained profit growth for Seagate, and we are actively engaged in strategic planning discussions now reaching into calendar 2028 and beyond.”

Western Digital echoes this sentiment:

“Our long‑term visibility continues to improve, with the duration of our agreements now extending into calendar year 2028 and calendar year 2029,” said Irving Tan, CEO of Western Digital.

Clear visibility

For years, storage has been treated as a commodity. These multi‑year LTAs give manufacturers unusually clear visibility into real demand, allowing them to scale production in a disciplined way. SanDisk, Seagate, and Western Digital can now align NAND wafer starts, HDD media output, and controller supply with multi‑year volume commitments instead of reacting to short‑term market fluctuations. This reduces the risk of overbuilding capacity while mitigating underinvestment ahead of demand spikes.

With guaranteed demand secured through multi‑year contracts, the three companies are more willing to commit billions of dollars to expanding fabs, assembly lines, and next‑generation technologies such as higher‑layer NAND and heat‑assisted magnetic recording (HAMR). These investments are aimed at confirmed demand rather than speculative forecasts, which could eventually enable broader consumer‑market growth—though the outcome remains uncertain.

Expansion, however, is inherently gradual. New 3D NAND capacity—like any semiconductor fab—takes years to ramp, and HDD advancements depend on incremental media and read/write head improvements from third parties such as Hoya, Resonac (formerly Showa Denko), and TDK. Consequently, supply may tighten before new capacity fully materializes.

In summary, while clearer demand visibility gives SanDisk, Seagate, and Western Digital greater ability to invest, the long‑term effects on the market are still unfolding.