How China’s Export Controls Are Disrupting HDD Manufacturing and Supply 

In April 2025, China introduced new export controls on several key metals, including gallium and germanium, and imposed stricter licensing requirements on additional critical materials such as rare earth elements. 

While not a total export ban, the policy has slowed the flow of neodymium and dysprosium through global supply chains. These two materials are central to HDD magnet production and, by extension, overall drive performance and reliability. 

Here’s how the new export measures are affecting HDD manufacturing economics. 

Market impact at a glance: 

• Neodymium oxide prices increased by approximately 40%
• Dysprosium oxide prices more than doubled 
• HDD manufacturing costs continue to rise 

For HDD manufacturers such as Seagate, Western Digital, and Toshiba, which rely on predictable material pricing, these increases have added substantial pressure to production costs and planning. 

HDD Supply Under Pressure 

The HDD market is being squeezed from both directions. On one side, demand for high-capacity drives of 20 terabytes and above continues to grow as AI and data center workloads expand. Large customers such as Oracle and Amazon are submitting multi-year forecasts to secure supply, and lead times now stretch well into 2026. 

On the other side, producing lower-capacity drives between 1 and 8 terabytes has become less viable. Rising rare earth costs have eroded profit margins, prompting some manufacturers to issue End-of-Life (EOL) notices for select models or reduce production volumes. This shift is creating a gap in supply for legacy and edge systems that still depend on these drives. 

Across the industry, suppliers are signaling that prices are likely to continue rising through 2025. 

Ripple Effects Across the Storage Ecosystem 

The effects of these shortages extend beyond HDDs. As availability tightens, enterprise buyers are shifting to SSDs as substitutes. This sudden change in demand is straining the NAND flash supply chain, increasing SSD prices, and extending delivery timelines. 

To mitigate risk, manufacturers and governments are accelerating efforts to develop alternative sources for mining and processing rare earth elements outside of China. Meanwhile, plans to establish a region-independent supply chain by 2029 are advancing. 

What began as a targeted trade policy has highlighted how dependent the world’s data infrastructure remains on a narrow and fragile supply base. For procurement teams, this means greater urgency to diversify suppliers and secure reliable sources before constraints deepen. 

What Procurement Teams Can Do to Get Out in Front™ of Shortages 

Procurement and supply chain leaders are adapting by improving visibility, flexibility, and supplier diversification. Effective strategies include: 

• Partnering with distributors that provide real-time global availability data 
• Securing long-term allocations for high-demand drives 
• Monitoring rare earth pricing and production trends 
• Expanding sourcing networks to reduce single-region dependency 

Proactive planning is critical as both material and production costs continue to rise. 

Secure Your HDD Supply Now 

With material and production costs continuing to rise, early planning is essential to maintain continuity and control costs. Fusion Worldwide provides real-time visibility into HDD availability across all major manufacturers, helping procurement teams act before market conditions tighten further. 

Our platform delivers instant availability checks, automated quote management, and rapid fulfillment to keep your supply chain moving. 

Contact Fusion Worldwide today for a customized component availability analysis or explore live HDD and SSD stock to secure your allocations while supply remains accessible. 

FAQ 

What are rare earth elements? 
Rare earth elements are a group of 17 metallic elements that play a critical role in high-tech manufacturing. They are used in magnets, batteries, semiconductors, and electronic components. In HDDs, neodymium and dysprosium enable the magnetic precision required for reliable, high-capacity storage. 

How are export controls affecting HDD supply? 
New licensing rules in China have disrupted the flow of key rare earth materials, driving up costs and extending production timelines. 

Can SSDs fully replace HDDs? 
Not yet. SSDs are faster, but HDDs remain the most cost-efficient option for large-scale and backup storage. 

How can procurement teams reduce supply risk? 
Partner with trusted distributors such as Fusion Worldwide, who provide verified sourcing, global reach, and real-time visibility into component availability. 

Why work with Fusion Worldwide? 
Fusion Worldwide combines global reach with real-time market data, helping procurement teams secure verified components even during shortages. With more than 20 years of experience in electronic component distribution, Fusion is a trusted partner in the open market, providing the insight and flexibility needed to navigate ongoing supply challenges. Contact now.