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Seagate Believes HDD Supply Disruption to Continue in 2012

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Seagate estimates 2012 HDD shortage at 150 million units

While the company was able to ship 47 million drives in Q4, the company warned analysts that the damage will result in further shortages. In 2012, the industry will not be able to supply hard drives with a total capacity of about 100 exabytes, Seagate CEO Stephen Luczo said. Based on the average capacity of shipping hard drives today, that translates to about 150 million units, according to the company.

The company noted that seven of Seagate's top 10 suppliers "suffered direct factory damage" and all product platforms "experienced some form of supply interruption." Luczo stressed that "a large portion of the precision machining capability that support the hard drive industry  the motors and base decks to actuators and specialty mechanical parts, were catastrophically lost." Still, the production is ramping up again and "over 200 requalifications have occurred for motor base assemblies alone," the executive said. The impact increased the average unit cost for Seagate by $2.50.

At this time, Seagate is somewhat pessimistic that the HDD industry can catch up with demand anytime soon. "We believe the impacts of the flooding are going to be felt well into 2013 in terms of trying to address the needs of customers to acquire storage," Luczo said during the earnings call with analysts.

For Q4, Seagate reported revenues of $3.2 billion and a net income of $563 million.

44 Comments Comment from the forums
  • Youngmind 02 February 2012 08:04
    Wait, didn't SEAGATE have no shortage because the flood in Thailand did not affect them but they still price gouged their HDDs?
    Reply
  • AznCracker 02 February 2012 08:12
    Supply and demand my friend. If they kept the hd prices low, they would have ran out of hard drives in a few weeks.
    Reply
  • fordry06 02 February 2012 08:17
    YoungmindWait, didn't SEAGATE have no shortage because the flood in Thailand did not affect them but they still price gouged their HDDs?
    lol, first off, just because seagate itselft wasn't directly impacted as much as other companies, its suppliers were, which means it has been affected severely as well. Hard to put together a hard drive when the warehouse is empty.....

    2nd, ever heard of supply and demand? supply fell way short of demand very suddenly so of course the price is going to go up, it isn't price gouging, its economics.
    Reply
  • narlzac85 02 February 2012 08:22
    And how long will they pretend that they are having a shortage (not saying they aren't right now) because they know that the internet cannot function without a constant supply of drives and they can basically charge whatever they want and people will keep buying them until one of the (few remaining) manufactures decides to undercut the rest? I understand that supply was hurt, but just how honest are they going to be about it when they have an easy chance to recover their loses.
    Reply
  • spasmolytic46 02 February 2012 08:24
    To bad this doesn't help lower SSD prices.
    Reply
  • CaedenV 02 February 2012 08:46
    Considering that it is 2012, and there is still a shortage I would say that their prognostications are correct lol

    Can't wait for my 2TB drives to get back under $100 each... I'm really hurting for a home server, if only I didn't need 4 of the damn things to do it right.
    Reply
  • alidan 02 February 2012 08:48
    YoungmindWait, didn't SEAGATE have no shortage because the flood in Thailand did not affect them but they still price gouged their HDDs?
    they increased it 10% due to them being the only real choice, they were effected though, just had most of their manufacture areas out of the flood
    Reply
  • CaedenV 02 February 2012 08:48
    spasmolytic46To bad this doesn't help lower SSD prices.On the contrary, the prices may not have come down much, but the rebates have been killer the last few months. I have no doubt that they are trying to entice buyers with those... just hoping that they forget to turn in the rebates.
    Reply
  • seab4ss 02 February 2012 08:59
    narlzac85And how long will they pretend that they are having a shortage (not saying they aren't right now) because they know that the internet cannot function without a constant supply of drives and they can basically charge whatever they want and people will keep buying them until one of the (few remaining) manufactures decides to undercut the rest? I understand that supply was hurt, but just how honest are they going to be about it when they have an easy chance to recover their loses.
    Capitalism and competition will sort this out. A few companies may try and colude to keep prices high but there will be other companies who will sell for the right market price to maximise output and turnover. Thats the beauty of a free market.
    Reply
  • danraies 02 February 2012 09:05
    The articles that I've read on this make it seem like all the HDD manufacturers are setting themselves up to milk this whole situation for as long as they can. Not that this is a bad strategy, but it's bad news for those of us hoping to buy drives at pre-flood prices sometime soon.

    The impact increased the average unit cost for Seagate by $2.50.

    That's interesting because the impact increased the average unit cost for the consumer by over double.
    Reply