China’s storage market enters adjustment phase as AI demand sustains structural shift in Q1 2026

China’s storage market moved into an adjustment phase in Q1 2026, following the AI-driven supply–demand imbalance that emerged in late 2025. While the sharp divergence seen in Q4—marked by falling volumes and surging prices—began to ease, the underlying influence of AI and data centre expansion continued to shape market dynamics. 

According to Futuresource’s quarterly tracking, overall shipment trends reflected a typical post–year-end correction. DRAM volumes declined by 26% quarter on quarter, while total SSD shipments fell by around 24%. In contrast, HDD performance was more resilient, with internal HDD volumes remaining broadly stable and external HDD shipments declining at a more moderate pace of 6%. 

This shift indicates that the acute supply pressures seen in Q4 are beginning to normalise, with pricing momentum stabilising as supply conditions gradually improve. However, AI server demand continues to act as a structural anchor, sustaining strong procurement of high-performance DRAM and enterprise SSDs. As a result, while consumer-driven segments experienced seasonal demand softness and inventory adjustments, enterprise and AI-related demand remained comparatively robust. 

The market is therefore transitioning from the sharp supply-driven divergence observed in Q4 toward a more balanced, yet still structurally reshaped phase. Rather than a return to traditional cyclical patterns, Q1 highlights the emergence of a new operating environment—where AI-driven demand not only dictates supply allocation but also underpins longer-term growth and competitive dynamics across China’s storage ecosystem. 

China SSD Market: Concentration Eases as Local Players Gain Share 

China’s SSD market remained relatively concentrated in Q1 2026, though early signs of gradual fragmentation have begun to emerge. Futuresource’s Q1 analysis shows that the top three brands – Kingston, SanDisk, and Samsung – collectively accounted for over 40% of the channel market, maintaining clear leadership, albeit with a slight easing in overall concentration. 

At the same time, local brands continued to gain momentum, with their combined share approaching 40% of the market. Among them, Zhitai stood out, benefiting from upstream support from its parent company, YMTC, reaching close to a 15% market share in Q1. It not only retained its position as the leading domestic brand but also emerged as one of the few players still able to scale in a supply-constrained environment. 

Compared with Q4, the market shift in Q1 was clearly defined by a modest easing in concentration alongside accelerating share gains for local brands. As supply conditions gradually improved and channel dynamics adjusted, international vendors saw a slight decline in their overall market control. In contrast, domestic players with strong upstream integration demonstrated greater resilience. Zhitai continued to build momentum, underscoring the growing importance of supply chain capabilities as a key competitive differentiator in the China SSD market.  

Overall, the market is transitioning from the supply-driven divergence seen in Q4 toward a more balanced phase, where both supply- and demand-side dynamics are jointly shaping structural change. 

China’s Enterprise SSD Market Accelerates into New Growth Cycle on Supply Restructuring and Technology Upgrades 

China’s enterprise SSD market sustained strong growth in Q1 2026, driven by the rapid expansion of AI infrastructure, hyperscale cloud computing, and intelligent data centres. Futuresource’s quarterly tracking discovered that total shipments increased by approximately 4% quarter on quarter compared to Q4 2025. As AI training and inference workloads continue to scale, demand for high-capacity, high-performance storage is accelerating, positioning enterprise SSDs as a core building block of next-generation computing infrastructure. 

Amid strong demand and relatively tight supply, the market has entered a phase of simultaneous volume and price growth, accelerating the adoption of PCIe Gen5, ultra-high-capacity SSDs, and AI-optimised storage solutions. While the overall market expanded moderately in Q1, vendor performance diverged, reflecting ongoing adjustments in supply dynamics and a gradual shift toward a more balanced competitive landscape. Against this backdrop, leading domestic players, such as Dapustor Microelectronics, are seeing more visible gains. Leveraging full-stack in-house capabilities, the company has strengthened its position in the high-end segment, ranking fourth in the market with around 6.4% share. 

Despite overseas vendors continuing to dominate the global high-end enterprise SSD market, China’s localisation rate remains below 20%, leaving significant room for domestic substitution. Chinese vendors are rapidly strengthening capabilities across the NAND ecosystem, controller technologies, and system-level optimisation, shifting competition toward technology leadership, product reliability, and AI-focused innovation. At the same time, increasing emphasis on supply chain resilience and diversified sourcing is accelerating enterprise adoption of domestic solutions, driving both a new growth cycle and structural upgrade in China’s enterprise SSD market. 

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