Give away medical masks when you place an order. learn more

Hard-Disk Drive Prices Will Drop in the First Half of 2012


Buyers can expect prices of hard-disk drives to fall in the first and second quarters as drive manufacturers restore production that was halted by severe flooding in Thailand in October, according to researcher IHS.

However, while prices will decrease, they will remain inflated at 2011 levels. The average global drive price increased 28 percent in the fourth quarter after flooding knocked out drive production for major drive manufacturers. Prices will decline 3 percent in the first quarter and 9 percent in the second, IHS reported.

Prices will remain high for several reasons. While HDD production is slowly rebounding, inventories are depleted as demand still exceeds supply, according to Fang Zhang, storage analyst for IHS. In addition, higher costs associated with the relocation of production, and higher component costs because of the flooding, will also keep prices at higher than normal levels.

“Furthermore, PC brands have signed annual contacts with HDD makers that have locked them into elevated pricing deals for the rest of the year,” said Zhang.

Also, the two mergers of Seagate and Samsung, and WDC and Hitachi GST will contribute to prices staying high because there are fewer competitors in the market, IHS reported.

Last year’s flooding resulted in shipments of hard-disk drives falling 26 percent in the fourth quarter of 2011 compared to the fourth of quarter of 2010. Shipments will drop another 13 percent in the first quarter of 2012 compared to the same quarter in 2011.

While drive production has resumed, the global HDD market will not return to year-over-year growth until the third quarter, when shipments rise by 2 percent. Shipments will surge in the fourth quarter, increasing 49 percent compared to the fourth quarter of 2011, according to IHS.

“Supply and demand should return to balance by the end of the third quarter,” said Zhang.

On a sequential quarterly basis, shipments in the first quarter are expected to increase by 13 percent over the fourth quarter of 2011. Shipments are expected to continue to grow by 14 percent sequentially in the second quarter, by 11 percent in the third quarter, and by 4 percent in the fourth quarter, IHS reported.

Following the flooding, major HDD suppliers shifted some production to locations outside of Thailand. At the same time, some major HDD component suppliers have resumed a portion of their production in the country and have migrated manufacturing operations to other regions.

Western Digital Corp. (WDC), the HDD manufacturer most impacted by the floods, has increased manufacturing in other countries, and is expected to return to full production by September, according to IHS. Toshiba Corp. has also moved some of its production to other countries as well.

However, these moves have not been enough to make up for the shortfall in production and will result in a plunge in global HDD inventory in the first quarter.

Supplier