Current HDD prices in line with pre-recession levels
The hard drive industry was hit particularly hard by the 2011 floods in Thailand, which is the second biggest producer of hard drives behind China. The devastating deluge was accompanied by a sharp increase in hard drive prices, with the average selling price for HDDs shooting up 28 percent to reach $66 in Q4 2011 (Q2 FY2012). Although a return to pre-flood prices does not seem likely in the immediate future, things aren’t nearly as bad as they were an year ago.
Now is not the time to be dealing with a faulty hard drive needing to be replaced, nor has it been for the past several months. That's because severe floods in Thailand in late 2011 left HDD manufacturers in bad shape, ultimately leading to a shortage of hard drives and higher costs for consumers. Relief is coming, but not for at least a couple more quarters, according to IHS iSuppli.
A new year means a fresh start, and a fresh start entails putting 2011's skyrocketing HDD prices behind us, right? Not quite. Seagate released its quarterly financial results yesterday, and although the report left investors cheering -- Seagate pocketed $3.2 billion in revenue despite last year's catastrophic floods -- things are looking a bit bleaker for end users. Seagate fully expects the hard drive shortage to continue until the end of 2012 as manufacturers struggle to catch up to consumer demand.
Blaming lackluster sales on the Thailand floods is the new black. Of course, the rising waters definitely affected washed-out HDD manufacturers with facilities in the Asian country; sales forecasts for PCs in general have also been reduced thanks to skyrocketing storage costs. Now, even AMD and Nvidia have started blaming the HDD shortage for a dip in quarterly GPU revenues. In case you're new here, we'd like to point out that GPUs don't use HDDs.
Western Digital's hard drive operations in Thailand spent part of the company's second fiscal quarter ended December 30, 2011 waterlogged after severe flooding ravaged the area, but if it was time to sink or swim, WD chose the latter. Remarkably, the hard drive maker still managed to ship 28.5 million HDD units during its second fiscal quarter, pulling in $2 billion in revenue and profiting $145 million.
Don't hold your breath waiting for hard drive prices to stabilize, not unless your lungs are large enough to sustain you for up to 12 months. It's been several months since flooding in Thailand left hard drive manufacturing equipment submerged in water, and as we kick off 2012, Hitachi warns the global hard drive industry won't completely recover until the end of 2012.
Flood waters may have receded in Thailand, but the hard drive industry is still reeling under the effects of the disaster. The impact hasn’t been restricted to the hard drive industry alone, though. The ensuing hard drive shortage has lead to serious supply chain disruptions in the PC industry, impacting everyone from PC vendors to chip makers.
Effects of the hard drive shortage resulting from major flooding in Thailand earlier this year continue to reverberate throughout the technology industry. Even Intel, the world's largest chip maker, isn't immune to to it all, and in fact the Santa Clara outfit warned today that its fourth quarter results are expected to be below the company's previous outlook.
It seems like every time we touch on the topic of hard drives lately, it's always bad news related to the recent flooding in Thailand. Ready for a change of pace? Good, because that's what you're getting today. Instead of news of more shortages and rising prices, we've now learned that hard drive volumes in the first quarter of 2012 will increase by several million units, decreasing the supply gap "significantly."
Hard drive prices aren't about to return to pre-flood levels, but they may gravitate towards that point sooner than some analysts are expecting. Western Digital, one of the HDD makers hit hard by the recent flooding in Thailand, said it has made "substantial progress" in getting its overseas operations partially up and running again, and is now producing hard drives at one of its buildings in Bang Pa-in (BPI), Thailand a week ahead of internal schedules.