Welcome to Origin’s weekly update on the on-going Hard Drive shortage
The real damage of the hard disk shortage is only now starting to bite – and it will last until the end of 2012. This is the prediction from hard-drive maker Seagate’s CEO Steve Luczo, “The pain won’t end then, as the industry will have to catch up with the 100 million shipments it won’t be able to deliver over the course of the year”. “And that will take another year to absorb, because it’s not like the industry is building new factories to chase that demand,” Luczo said. “We can’t over invest to meet some bubble and then get stuck with excess capacity.”
Luczo said built up inventory is only now starting to run out, so it’s going to get much worse over the next few weeks.
“There was already a lot of built inventory and a lot of finished goods moving through the system,” he said. “And now all that is gone, and I think customers are starting to see shelves of parts go empty, and realising that they’re not going to be filled for anywhere from one to two months.”
He warned that although the floods hit six weeks ago, many “fairly sophisticated companies” clearly didn’t understand the full scale of the problem – although he praised Apple’s CEO Tim Cook and HP’s CEO Meg Whitman as two tech leaders who were on top of the problem.
Whitman said in a conference call at the beginning of the week that HP “reacted really fast” to the problem. “We set up a war room, we began pulling in inventory and made strategic buys of hard drives back in early October,” she said, adding that HP will get more than it’s “fair share” of the drives that are available.
Western Digital, the worst hit hard drive manufacturer in Thailand’s recent floods, announced on Friday (24th November 2011) that it has partly resumed production this week but has warned of tighter global supply until early next year.
Toshiba said on Friday it was uncertain when it can resume production from its flood-hit plant, as it continues to clean up.
“We are actually going to have our first big cleaning day tomorrow in the very first area of our plant where our warehouse is,” Kobkarn Wattanavrangkul, chairwoman of Toshiba’s Thai unit told Reuters, adding water has receded now to about 45-50 cm from its peak of as high as three metres.
“In terms of resuming production, we still can’t tell you when, since the area we’ll be getting in tomorrow is our warehouse, not the area of our production line. For that, we’re still going to have to wait until the water (goes) down a bit more.”
Western Digital expected global hard drive output shortages to amount to 60 million units in the current quarter, as supplies are seen at 120 million units, well short of estimated demand of between 170 and 180 million units.
“The company believes that significant industry supply constraints will continue in the March quarter and beyond,” Western Digital said in a statement.
Origin Storage MD, Andy Cordial, commented , “I anticipate shortages will continue into the first quarter of 2012, but believe we shall start seeing improvement in production and availability around April 2012″.
As always, please feel free to contact us for any further information :-
Andy Cordial – 01256 813988 — Richie Maure 01256 813986