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WD HDD Industry Will Be Supply Constrained Due to Thailand Flooding

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kitamesume:
^ the problem is, well this is just a rough guess, is that they had like majority of their major manufacturing factories on thailand which btw went for a swimming lesson, other lesser factories just couldn't keep up with the demand obviously.


--- Quote ---Vendors hit include Western Digital, Hitachi and Seagate. Western Digital, which produces 60 percent of its HDDs in Thailand, has been forced to shut down its plant. Hitachi also manufactures a large percentage of its mobile (2.5”) HDDs at a plant in Thailand, and its plant too has been severely impacted.  Seagate relies on several sub assembly suppliers in Thailand some of which had factories that were flooded or are shut down due to lack of worker access. We do not believe the enterprise class products will be as severely affected as desktop and mobile.
--- End quote ---

oh and theres to note that other manufacturers like seagate and hitachi hardly got hit by the flooding though they still exhibited a price hike, so what do you think was their reason for it? my guess is that they saw a profitable plan in this and went with the flow.

vuzedome:
I don't really see how is it just the manufacturers fault in the price hike, all the retail shops here just jack up everything once they heard that other shops overseas are doing it as well.

kitamesume:
^ yes exactly, its not exactly the manufacturer being short on stocks but rather they're abusing the news and forcing a price hike, well the retailers are in cahoots with this bullshit as well.

if you'd think clearly its been almost 3months but the prices is still well over double on some places, usually it should drop considerably once the stocks are returned but nope not at all.

AnimeJanai:
Don't forget that the factory should be repaired and producing by now.

As for the shortage, another benefit to Seagate and Western Digital is that they can reduce operating costs by cutting the warranties down to 90 days, 6 months, or one year (depending on model and type) instead of leaving them at their 3 year consumer warranty levels.  That's because there is no downside pressure to reducing warranties when the shortage forces customers to buy regardless of warranty level since reducing the warranty won't drive many customers away.   Of course, when production increases and prices drop, the warranties will not go back up to their original lengths.

Now looking forward to hard drives including the wireless listening feature that Intel ivybridge processors have for being disabled by wireless 3G.   

** UPDATE **  Updated with news from Softpedia

Summary (TLDR): The stockpile of drives hadn't even been exhausted before the flooded factories were producing again.  So it was a fake crisis created to take advantage of news and current events.  It's similar to all the other world news the corporations use as an excuse to jack up prices but never let drop back down.   


http://news.softpedia.com/news/HDD-Crisis-Was-Fake-Seagate-and-Western-Digital-Post-Big-Profits-266676.shtml

Hard drive manufacturers Seagate Technology and Western Digital have reported great financial results after such a prolonged hard disk drive “crisis.”

There was always talk about the fact that hard disk drives are so cheap, that the profitability of the manufacturers is getting low enough to limit the R&D investments they would otherwise make.

Many industry insiders were talking about overstocking and lowering profits. The situation was bleak.

One year ago, Samsung wanted to get rid of their HDD division, despite the fact that the products developed there were quite good. The F1 and F3 lines of desktop HDD are very good performers to this day, and they’ve been since way back in 2008.

Seagate jumped at the opportunity and snatched Samsung’s hard drive division for almost 2 billion dollars, back in April 2011.

Hitachi was also doing quite alright. They had good mobile HDDs and the very successful 1000.C hard disk drive line that excelled when dealing with multi-threaded work. Still, the marketplace for HDDs was so difficult that they’ve announced they’ll be selling their hard drive division to Western Digital.

The Thailand flood came and went and we were left with the hard drive “crisis”. While the hard drives were almost never “out of stock” the prices increased even by 300%.

Months passed by, but there seemed to be no end to the hard drive crisis, despite the fact that both manufacturers were announcing the restoration of the plants affected by the waters.

In a report from earlier his year, we found out that Seagate even managed to increase its HDD shipments with around 2% when compared to the previous year. Where exactly was that “crisis?”

Now Seagate proudly announces it has decided to spend 2.5 billion dollars to repurchase a considerable amount of its outstanding ordinary shares. Spending 2.5 billion dollars less than a year after buying Samsung’s HDD division for another 2 billion doesn’t really seem like a company “suffering” from a “crisis.”

Western Digital, too, has just announced its fiscal third quarter financial results. Despite recently acquiring HGST (that’s Hitachi’s HDD division) in March last year and also “suffering” from a “difficult crisis,” they’ve made a net income of 146 million dollars, or 62 cents per share.

"Our third quarter performance demonstrates the potential of the new Western Digital, with just three and a half weeks of HGST results combined with the standalone WD business," said John Coyne, CEO of Western Digital.

By their reasoning: bad market plus low margins plus the HDD crisis equals big profits.

Good job if we may say. We finally have a humongous duopoly in the hard drive market too. This is probably the most desirable situation for the end-users paying 300% more money for last year's technology.

We shall now wait and see when the prices go back to where they were one year ago, if ever.

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