The recent flooding in Thailand has forced some hard disk drive makers to suspend operations in the country. This in turn has caused a global shortage that has already driven up some prices in South Africa.
Mahomed Cassim, who heads up Esquire, said that they have already seen 2 terabyte (TB) drives jump in price by over 60% and that it looks like the price will continue to increase until the Q1 2012.
“South Africa will be a casualty of the hard disk shortage as the Europe , UK and USA markets are preparing for ‘High Season’ and the bulk of Drives will go to those markets,” said Cassim.
Elaine Wang from Rectron corroborated Cassim’s assessment, saying that according to analysts we could continue to see constrained supply and higher prices well into next year.
The importance of Thailand
Wang said that the flooding in Thailand has had a major adverse effect on the supply of hard drives in the last two weeks.
“Approximately half of the world’s hard disk drives are produced in Thailand. In the last two weeks, we’ve seen both Western Digital and Toshiba suspend production, due to flooding in factories.”
Western digital issued a press statement early last week (17 October 2011) assuring that their employees remain safe, but warning that the floods would affect its ability to meet customer demand for its products in the December quarter. This is despite the company’s other facilities in Malaysia, Singapore and the U.S. being fully operational.
“While Seagate’s factories have not been flooded, there have been issues in the supply of components that are sourced through the local Thai market,” Wang said.
Wang explained that hard drive manufacturers do try to keep some level of inventory on hard drives for sales, but a lot of panic buying is taking its toll on stock levels.
Impact on SA market
“OEMs and distributors alike are doing their best to stock up on hard drives to dampen the effect of the shortage,” Wang said, but added that they are hearing rumours of players already out of stock.
“The basic laws of supply and demand dictate that when supply is short, we will see an increase in pricing, and in fact, we have already seen pricing from both Western Digital and Seagate shoot up,” Wang said.
According to Wang, it’s even possible that there will be further pricing increases in the coming months, depending on the ability of manufacturers and their components suppliers to recover from the disaster.
Wang said that we could also expect to see a net increase of pricing on PCs, notebooks, and servers as a direct result of the cost price increases on hard drives.
“I also expect that we will start seeing changes in the brands of external HDD available in the market,” Wang said. “We should start to see a shift away from third-party branded external drives, and more of a focus on offerings by the hard drive manufacturers, namely Seagate, Western Digital and Toshiba.