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

By - Source: Bloomberg | B 91 comments

Hard drive production may be back to pre-flood levels by the end of 2012, claims Seagate's CEO.

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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  • 17 Hide
    runswindows95 , November 19, 2011 11:58 PM
    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 Hide
    TheKurrgan , November 20, 2011 12:12 AM
    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..
  • 16 Hide
    leandrodafontoura , November 20, 2011 12:18 AM
    Perhaps this improves SSD sales
Other Comments
  • 8 Hide
    phyco126 , November 19, 2011 11:17 PM
    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.
  • 11 Hide
    zanny , November 19, 2011 11:41 PM
    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.
  • 2 Hide
    Anonymous , November 19, 2011 11:49 PM
    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
  • 17 Hide
    runswindows95 , November 19, 2011 11:58 PM
    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.
  • -9 Hide
    hotsacoman , November 20, 2011 12:01 AM
    intel4evaThese assholes may be able to recoup some of their losses via price gouging, but those few companies unaffected or the first to successfully switch suppliers will undoubtedly get this market back to the cutthroat prices we're used to. The first company to stop gouging will likely see a significant increase in market share. I'm seriously hoping that the worst gougers (i.e. Seagate) have their HDD business bite the dust.The massive increase in the usefulness of computers in the last few years have been due to massive increases in storage capacity with lower and lower prices. Without hard drives evolving faster than any other pc components, youtube, gmail, wikipedia and many other innovations would not be possible on the scale seen today. If the jerks at Seagate think that they can use this crisis to recoup their losses they got another thing coming. (the losses are not due to customers, but to their own poor contingency planning).


    These assholes probably caused this crisis to recoup their losses. Are there any pictures or proof that they're under three feet of water? I wonder...
  • 0 Hide
    SoiledBottom , November 20, 2011 12:02 AM
    The aluminum foil hat wearin conspiracy nut job inside me says this is just another push by the government to store my info on there cloud servers........anywhoo back to looking over floor plans for my new place at the camp FEMA in my neighborhood.
  • -4 Hide
    sgtopmobile , November 20, 2011 12:08 AM
    THIS IS GREAT! this will force people to atleast consider buying an SSD, that way the SSD market share will rise and we will be one step closer to make SSD mainstream
  • 17 Hide
    TheKurrgan , November 20, 2011 12:12 AM
    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..
  • 3 Hide
    calgary computer repair , November 20, 2011 12:14 AM
    To computer repairs companies like mine, this seems like excessive price gouging.
  • 11 Hide
    zhihao50 , November 20, 2011 12:18 AM
    thekurrganAnyone 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?.


    Fortunately electronic industry is the exception where price going down is the rule. :D 
  • 16 Hide
    leandrodafontoura , November 20, 2011 12:18 AM
    Perhaps this improves SSD sales
  • 5 Hide
    amk-aka-Phantom , November 20, 2011 12:27 AM
    sgtopmobileTHIS IS GREAT! this will force people to atleast consider buying an SSD, that way the SSD market share will rise and we will be one step closer to make SSD mainstream

    leandrodafontouraPerhaps this improves SSD sales


    Perhaps. But the damage that the smaller businesses with needs for large storage will take is too much. Some of them can barely include a 1TB (OLD price) in their budget, forget SSDs and new prices... Seagate and others WILL lower their prices or the demand will fall beyond what they can earn by increasing the price.
  • 13 Hide
    dimar , November 20, 2011 12:29 AM
    sgtopmobileTHIS IS GREAT! this will force people to atleast consider buying an SSD, that way the SSD market share will rise and we will be one step closer to make SSD mainstream


    And the next thing you know, flash chip factory will be rocked by a hurricane!
  • 8 Hide
    hetneo , November 20, 2011 12:33 AM
    crazypcmanIf 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

    Some parts like platters and controllers are made by very small number of factories.
  • 9 Hide
    spentshells , November 20, 2011 12:37 AM
    The drive I bought for $29 is now $99 months later. Im going to buy a high end SSD.
    This will keep me from Hoarding. I feel this will be good for me.
    When DVD-R and Blueray disks go up then I will agree we are being hooped.
  • 10 Hide
    drapacioli , November 20, 2011 12:38 AM
    You know who's going to suffer here? The consumer that has their hard drive go at a time when they can't afford the original price, let alone a price hike of 100-150%. That's where it really hurts.
  • -5 Hide
    drwho1 , November 20, 2011 12:52 AM
    Two Words: Black Friday
    :) 
  • 7 Hide
    dco , November 20, 2011 1:05 AM
    Quote:
    pushing average hard drive prices up by 20-percent


    20% I could live with. All HDD's available to me have seen a 230% markup on prices from last month and are steadily increasing each week.
  • 0 Hide
    dormantreign , November 20, 2011 1:11 AM
    I got lucky. I just picked up 14TB of hard drives over the summer and just now a blu ray burner, ill wait a year or two before buying another hard drive.
  • 1 Hide
    theuniquegamer , November 20, 2011 1:11 AM
    So that means the price will keep rising till the end of summer 2012. In the local stores prices have been already doubled. They are charging almost $80-100 for 500gb. If the ssd price will become a little lower like $1/gb then most of the buyers will buy 128gb or 256gb ssds instead of Hdds.
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