Michael Grotticelli /
12.15.2011
Originally featured on BroadcastEngineering.com
Hard drive supplies dry up after flooding in Thailand

As a follow up to story we published at the end of November, hard disk supplies — dried up due to the severe flooding in Thailand — will continue to be short supply into next year. As a result, Intel this week lowered its outlook expecting to make $1 billion less in revenue in the fourth quarter than a year ago.

Intel said it expected the shortage to extend into next spring. "The worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard disk drive supply shortages," Intel said in a statement. "The company expects hard disk drive supply shortages to continue into the first quarter, followed by a rebuilding of microprocessor inventories as supplies of hard disk drives recover during the first half of 2012."

IDC (www.idc.com), the market research firm, confirmed the shortage will continue into the new year. "I think the most painful period will occur now through February of next year. We expect the situation will improve, but it won't feel as if things are back to normal until 2013," John Rydning, an IDC analyst who follows the hard disk drive market, told "Computerworld."

Supplies, Rydning said, should increase to the point where it will be possible to meet immediate demand in the second half of next year. However, he said distribution channels, online retail sites and system manufacturers will continue to feel the affects into the following year.

IDC noted that Western Digital, the largest producer of hard drives, was hit the hardest by the flooding in Thailand, with up to 75 percent of its production temporarily shut down. Seagate Technology, another major vendor of hard drives, said the floods will cause hard disk drive supplies to be significantly constrained for several quarters.

The hard drive shortage is likely to favor Apple. In its Macbook Air, Apple uses flash storage rather than hard drives. Most other computer makers still use hard drives.

This quarter's hard drive shipments will fall about 30 percent below demand, IDC reported. "We think the industry will ship about 120 million units, and demand was 175 million units, so you get the idea of the impact from the floods," Rydning said.

Because of the flood, hard drive prices have soared over the past month, in some cases as much as 100 percent. Despite concerns about rising costs, however, there are indications that prices are starting to settle down.



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