The hard drive market is already under pressure due to the emergence of cryptocurrency mining using hard drives, leading to stratospheric pricing, but that could become even worse in the coming months. According to some market analysts, the reappearance of the pandemic in Southeast Asia in general and Thailand in particular, along with a shortage of components, threatens hard drive production in the second half of the year. If authorities tighten lockdowns, then the supply of HDDs in the second half may be significantly impacted.
Seagate and Western Digital produce a significant portion of their hard drives in Thailand, where local authorities forced lockdowns in highly populated areas starting July 12 to avoid the spread of the virus. HDD assembly facilities and factories where components (such as printed circuit boards) are built by companies like Quanta Storage and New Kinpo Group are located far from populated areas, but there is still an impact on production, reports DigiTimes.
If the situation with the COVID-19 pandemic gets worse and Thailand and authorities decide to temporarily shut down manufacturing facilities, HDD production would either slow down or stop completely.
Neither Seagate nor Western Digital have commented on the story.
Demand for hard drives outstripped supply in May and June due to the Chia Coin farming craze, which caused a massive increase in HDD prices in retail. Both Seagate and Western Digital maximized their hard drive output in the second quarter to ease the shortages, but did not commit to investing any money in expanding their production capacities. Meanwhile, the actual increase of HDD shipments in Q2 2021 was a rather modest 2.75 million – 4.45 million units, according to preliminary data from Trendfocus (via Storage Newsletter).
In total, 65.75 million ~ 67.45 million hard drives were shipped in the second quarter, up from approximately 63 million a quarter before. Western Digital could increase its shipments by up to 7.8% quarter-over-quarter, Toshiba could boost its supply by up to 7.8% QoQ, whereas Seagate could increase its unit shipments by up to 2.8% QoQ, preliminary Trendfocus data shows.
Based on information from Trendfocus, it does not look like HDD makers have a lot of spare capacity left, especially considering the high demand for hard drives both from hyperscale datacenters and PC makers/regular users. To that end, any disruption to production would only exacerbate ongoing drive supply issues.