Seagate: HDD Production Won't Return to Normal For 1 Year

Wednesday Seagate Chief Executive Officer Stephen J. Luczo said that Wall Street analysts are talking nonsense when they say that hard drive production will be back to pre-flood levels by next summer. In fact, he's predicting a difficult road ahead for the industry given that many of Seagate's own 130 or so suppliers are still under three feet of water.

"This is going to take a lot longer than people are assuming, until the end of 2012 at least," he admitted. "And by then, demand will have gone up."

The flooding in Thailand is currently affecting an infrastructure that produces around 40-percent of the world's hard drives sold by Seagate, Western Digital and Toshiba, thus pushing average hard drive prices up by 20-percent. That said, industry production this quarter is expected to be 50 million drives shy of the 180 million target.

"It’s going to be very interesting to see who gets drives and who doesn’t," Luczo said, adding that customers are suddenly eager to stockpile some of Seagate's load of drives already manufactured even though they sport higher prices.

"Some have offered $250 million upfront," he told Bloomberg.

But there may be a positive side to the story... at least for hard drive manufacturers. Luczo indicated that the flood has seemingly made the industry a bit more appreciative of hard drive manufacturers. The floods have even given Luczo more leverage on prices, but he's willing to settle on a 20-percent hike for those who commit to one- to three-year contracts rather than raise prices 40-percent across the board.

"People are going to appreciate the complexity of this business," he said.

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  • Man, times like this makes me wish I had money so I could have stock up on a few hard drives before this happened. $100 for a 320GB is insane.
    17
  • Anyone ever noticed how whenever a commodity item has its "supply" interrupted by a natural disaster, the price NEVER goes back to the way it was PRIOR to the disaster?
    Case in point, Gas prices in the south east.
    The day before Katrina hit, the gas prices there where around 1.00 - 1.60 cheaper than in California (My folks live in Georgia so I get the info)
    They where consistently this way for about 12 years, then after Katrina hit and the out right thievery stopped, the leveled off at around the same national average.
    The Oil companies blamed the problems at the refineries, however those things where fixed within just a few months.. yet the prices never went back to the way they where...
    Interesting huh? Hope we don't see the same thing here.. could be a way to increase margins..
    17
  • Perhaps this improves SSD sales
    16
  • Other Comments
  • So... are retailers paying a 20% increase in price, or just manufacturers? Because if so, that is awfully nice of them to raise the price up themselves by as high as 150% (if not more). If not, well... eh. Might end up cheaper to buy a low end computer just for its hard drive.
    8
  • I was intending to make a new build next summer after Ivy Bridge comes out. I still will, just will use my now 8 year old 640gb hard disk with a new SSD until prices are back down.
    11
  • If all these companies make hard drives in the same place, then is it possible they are all made in same building(s) by the same people? Not really much of a difference in product
    2