HDD Market Recovers Despite Shortage in Supply

Bangalore: The supply of hard disk drives (HDDs) in 2012 will continue to fall short of demand says Seagate a technology giant, however on the contrary the silver lining here is that the hard disk drive industry appears to be getting over the worst of the Thailand floods with Seagate reporting better than expected financial results.

The Thailand floods that put one-third of the country under water in August last year had major impact on supply shortage of HDDs and eventually the reason behind the HDD cost escalation. The natural disaster had also lead to significant slowdown in manufacturing process limiting the HDD production and supply to vendors but the response in the HDD market was swift and efforts to get factories up and running has paid off as the industry is now showing some positive signs of improvement and recovery.

"The industry's ability to manufacture and ship hard disk drives was severely disrupted by flooding in Thailand and is now slowly recovering," the company stated.

Seagate reported a growth in revenue by $3.2 billion up by about 18 percent from the same quarter in the previous year which was $2.7 billion and net income of $563 million which was $150 million around the same period in 2010.

In December 2011 quarter, the HDD industry is estimated to have produced 105 to 110 million drives, and shipped 119 million units, which fell short of demand for 175 million units but the company managed to ship 47 million units in the quarter which increased its average selling price by $13 compared to previous quarter even when the average unit costs also increased by about $2.50 as a result of the floods.

Because of a "relatively benign" pricing environment the company expects at least $20 billion in revenue in this year and a revenue of $4.3 billion in the present quarter through March by shipping at least 60 million drives.