US-China AI Resonance! Demand for Enterprise-Grade Hard Drives (eSSDs) Expected to Surge in the Second Half of the Year

The AI wave is reshaping the global storage market landscape, with North America and China acting as two major engines, leading to a structural demand inflection point for enterprise-grade solid-state drives (eSSDs).

According to TrendForce data, major U.S. cloud service providers (CSPs) have successively raised their eSSD procurement forecasts in the past two weeks, pushing the total eSSD order volume in the fourth quarter of this year to potentially surpass the historical record set in the third quarter.

According to TrendFun, a report released by Citi Research on September 21 predicts that eSSD demand will grow by 52.9% year-on-year in 2027, driven by the popularization of continuous learning technology, and the NAND supply-demand gap will widen to -6.1% at that time.

The demand structure has also undergone a qualitative change: high-capacity, low-cost QLC (four-layer cell) products are rapidly emerging, rivaling the high-performance TLC products that previously dominated the market. This signifies that eSSD applications have expanded from AI model training and inference to a wider range of AI applications. Industry insiders indicate that, influenced by NAND manufacturers' increased capacity and pricing control, upward pressure on eSSD prices is expected to continue into the fourth quarter.

Two major demand engines: North American Agent AI and Chinese Key-Value Cache Offloading

Industry experts point out that the demand for eSSDs in the second half of the year will be driven by two main drivers: the expansion of Agent AI in North America and the application of KV cache offloading technology in China.

In North America, with the accelerated adoption of agent AI, the demand for large-scale real-time data retrieval and caching is surging. TrendForce analysis states that agent AI needs to rapidly access and store large amounts of contextual data when making autonomous decisions and taking actions, which will significantly increase the demand for high-performance eSSDs. Citi research also points out that continuous learning technology requires AI systems to retain historical data while constantly absorbing new information, thereby creating a continuous demand for high-capacity storage.

In China, AI companies like DeepSeek are actively promoting KV cache offloading solutions. This technology reduces reliance on expensive high-performance memory by migrating low-priority cached data during inference from high-performance memory (HBM, GDDR) to high-speed, high-capacity QLC solid-state drives, while improving model inference efficiency and reducing overall costs.

QLC Reshapes AI Infrastructure Architecture

The core characteristic of this round of demand growth is the comprehensive rise of QLC products. Cloud service providers are actively leveraging QLC to achieve both high capacity and cost-effectiveness, with applications covering vector database construction—a core component of AI search and recommendation systems. TrendForce believes that this shift may drive a restructuring of AI infrastructure design centered on QLC, with an impact extending beyond the procurement adjustments of a few hyperscale cloud vendors.

Citigroup Research further points out that near-GPU storage solutions based on QLC will gradually gain market acceptance to support AI systems in achieving more efficient data retention and retrieval near accelerators. In addition, demand for advanced storage solutions such as XL Flash and HBF, as well as complementary storage technologies such as CXL, will also increase simultaneously.

Looking at the longer term, Citi predicts that demand for high-density eSSDs will grow by 53% and 41% year-on-year in 2027 and 2028, respectively, with the replacement demand from HDDs to SSDs also providing additional support for the adoption of high-density storage . While consumer-grade NAND demand is under pressure due to the weak PC and mobile terminal markets, Citi believes that strong enterprise-grade AI demand will be enough to offset this drag.

Tightening supply strengthens NAND manufacturers' pricing power

Demand expansion is driving the NAND supply-demand balance to tilt more rapidly toward sellers. Citi Research predicts that NAND demand will grow by 29% and 33% year-on-year in 2027 and 2028, respectively, while supply growth will be only 21% and 25%. This gap stems from memory manufacturers generally prioritizing capital expenditures on DRAM and HBM capacity expansion, while being relatively restrained in new investments in NAND. This will result in a supply-demand gap of -6.1% in 2027 and -5.5% in 2028 (with an estimated -0.8% in 2026).

TrendForce also points out that major NAND manufacturers, including Samsung Electronics, SK Hynix, Micron, Kioxia, and YMTC, are strengthening their control over enterprise market capacity allocation and pricing, making further price increases for eSSDs more likely.

In the second quarter of this year, Samsung Electronics led the eSSD market with $14.154 billion in revenue, holding a 35.1% market share. SK Hynix and Solidigm combined achieved $8.631 billion, accounting for 21.1%. Micron ranked third with $6.983 billion, holding a 17.1% share. In the Chinese market, Yangtze Memory Technologies Co., Ltd. (YMTC) is expected to gain market share due to the surge in demand for KV cache offloading.

Citigroup Research maintains a "buy" rating on both Samsung Electronics and SK Hynix, believing that both are poised to benefit from tightening NAND fundamentals and AI-driven growth in structured memory demand.

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