Industry Has Two Months of HDD Stock Remaining - Analysts

PC Market Prepares to Be Hit By HDD Shortage

by Anton Shilov
10/26/2011 | 10:45 PM

The situation in Thailand is getting worse as water levels are increasing. As Thailand is a strategic location for the hard disk drive industry, accounting for over 30% of global capacity, the flooding has hit HDD makers hard. But based on the current situation, there should be limited impact on both PC shipment volume, according to TrendForce.

 

Due to the flooding, Western Digital shut down two local plants, which will result in a 60% capacity decrease and Seagate suffers from tight supply of components. For exmaple, Nidec, which controls nearly 80% of the global HDD motor market, has temporarily shut down seven factories; it is not yet known when operations will resume. In general, everything points to the fact that in several weeks the PC industry may be hit by shortage of hard drives. But not everything is that bad.

According to TrendForce, currently PC OEMs have an average of approximately two to four weeks of HDD inventory remaining. Along with HDD suppliers’ key component inventory, the industry supply chain has over two months of stock left. At the end of this period, the PC industry will enter its down season in the beginning of December, and the decreased demand will counteract any risk of material shortages. It should be kept in mind that the demand for PCs in China increases early in the year and it remains to be seen whether HDD manufacturers are able to fulfill the demand then.

If key component makers manage to resume operations in Thailand, PC OEMs should be able to avoid a shipment crisis. Meanwhile, some PC OEMs are seriously considering the adoption of SSD as a temporary replacement for HDD. However, as the price gap between SSD and HDD is still fairly wide, SSD adoption will likely only increase in premium PC lineups.