Fujifilm's $64M Bet on Magnetic Tape — The Odd Story of an 'Obsolete' Technology at the Heart of the AI Boom
There is something profoundly ironic about one of the most capital-intensive sectors in the world — AI data centers worth tens of billions of dollars — increasingly depending on a technology that many analysts had written off two decades ago. Magnetic tape, that black ribbon that filled server closets and still inhabits the basements of enterprises across the globe, is growing again. And Fujifilm, the global leader in storage tape, has just announced the largest expansion in its history.
On October 29, the Japanese company revealed a ¥10 billion investment plan (approximately $63 million) to quintuple its production capacity for magnetic data storage tapes by the end of the fiscal year 2028. The factory in Odawara, Kanagawa prefecture, will be expanded and will hire new employees. The target product is the FUJIFILM LTO Ultrium 10, launched in early 2026, with a native capacity of 40 TB per cartridge and up to 100 TB with 2.5:1 compression.
But what really matters here is not the technology itself — it is the fact that it is becoming essential to the global AI infrastructure, almost unexpectedly for everyone involved.
Why magnetic tape?
For anyone not directly working with data centers, the answer may sound surprising. SSDs are faster. Hard drives offer more capacity per dollar in some scenarios. Cloud computing sounds like the obvious solution for storage. But magnetic tape possesses three advantages that have become decisive in the AI era:
Cost per archived terabyte. Writing to tape costs a tiny fraction of what disk or SSD storage costs. For data that is written once and read rarely — which describes most AI training datasets, historical logs, compliance backup archives — tape is simply the most economical option available. When SK Hynix recently announced that the memory shortage will persist until 2030 and component prices will remain under pressure, tape's cost advantage has become even more compelling.
Physical isolation. A tape cartridge can be removed from any network and stored offline — the so-called "air gap." In a scenario of sophisticated ransomware, where attacks like the Binance breach in early October stole $6.3 billion by exploiting infrastructure vulnerabilities, data archived offline represents the last line of defense. If the active system is compromised, the data on tape remains intact in a physical vault.
Energy efficiency. A tape sitting in a cabinet consumes zero electricity. A server rack dedicated to cold storage, even using low-rotation disks, draws continuous power for power supply, cooling, and maintenance. In AI data centers that spend millions on electricity per month, the operational cost difference of tape is significant.
What Fujifilm is building
Fujifilm's announcement is particularly notable for several reasons. First, it is the largest investment the company has ever made in facilities dedicated to LTO tape production. The company, which has researched magnetic tape since the 1950s and launched its first LTO cartridge in 2000, is making a substantial bet on a market that appeared destined for gradual extinction.
The Odawara factory expansion will include the enlargement of manufacturing facilities and an increase in the workforce. The main product will be the LTO Ultrium 10, whose latest generation was launched in 2025. But the company is also laying the groundwork for the future: LTO-11, expected to arrive in 2029, will offer 70 TB native; LTO-12, in preliminary projects, will reach 120 TB; and there are plans for formats capable of storing 210 TB (LTO-13) and even 365 TB (LTO-14) per cartridge.
Fujifilm did not disclose specific customer names but stated that cloud service providers and data center operators have been significantly expanding their use of tape. "The rapid spread of generative AI and cloud services is driving exponential growth in the volume of data generated worldwide," the company said in its official press release.
The paradox of storage in the AI era
What makes this story truly interesting is the paradox it reveals about AI infrastructure. The big players in the industry spend fortunes on GPU chips, submarine fiber-optic cables, and data center networks — but the true bottleneck, perhaps, lies in something that seems to have come straight from the 1990s.
LTO was created in the 1990s as an open-format alternative to proprietary systems, managed by a consortium that includes HPE, IBM, and Quantum Corporation. In 2025, global LTO tape shipments fell 9%, to 160.3 exabytes, but had already recovered by 57% in Q1 2026, according to LTO Program data. Tape is not dying — it is specializing.
While companies like Microsoft investigate DNA storage or glass plate storage (Project Silica, capable of retaining data for 10,000 years) and SPhotonix explores 3D voxels in quartz, magnetic tape represents what experts call "mature storage" — a stable, predictable, economically proven technology. For most data center operators, predictability is more valuable than long-term promises.
What to watch
Fujifilm's expansion is an indicator that demand for cold storage (data that must be preserved long-term but is rarely accessed) is growing at a pace that exceeds industry expectations. With generative AI requiring ever-larger datasets and data centers operating at maximum capacity, magnetic tape may be a key piece in the infrastructure puzzle that few notice.
The question is whether this tape resurgence is a sign of healthy maturity in the storage market — where the right technology, not the newest, wins — or whether it reflects a broader tension between the explosive speed of AI and the real need to stop, archive, and protect what has already been produced.
Sources: Ars Technica, Nikkei Asia, TechSpot
✓ Independent sources cross-checked and verified before publishing
