I've dealt with a different situation before and handled it with sharding. It's pretty easy to retrofit in code, and it's not hard to do a one-time move of existing files to the new layout.

Simply put, you make an algorithm like:

    let hash = md5(filename)
    let folderPath = path.join(root, hash.substr(0,1), hash.substr(0,2), hash.substr(0,3), filename)

The original name can be used to derive the sharded path, so you don't need a lookup database or anything crazy like that.

You end up storing files like:

    .../7/7f/7fa/somefile.png

This scales to whatever depth you want: with 3 levels and 1.2 million files, you can expect about 1200000/16^3 = 293 files per directory, which is trivial.

There's lots of other strategies, too, depending on your needs:

    # filename are already GUIDs or hashes:
    .../1/1f/1fd/1fd2dd27-d307-47b2-b37d-11903fd0f03d.png

    # date-based to make cleaning up old files easy:
    .../2023/01/19/app.log

    # hash by existing numeric identifier (like customerid) using modulus:
    .../customers/4/94/52194/customerfile.dat