SAN FRANCISCO--The Taiwanese hardware and component channel could be badly hit as a result of the crippling floods in Thailand which have resulted in hard disc drive (HDD) shortages globally, though the move could speed up the transition to solid state drives (SSDs), according to sources.
A marketing manager at motherboard manufacturer Gigabyte Technology Co. told EE Times that while it was an exaggeration to say shipments might drop 25 percent in the fourth quarter as a result of the knock on effect from the flooding, a 10 to 15 percent decrease was likely.
“We haven't been affected yet, but the market is in panic mode because computer makers don't know when they will be able to order HDDs from Western Digital Corp. (WD) and Seagate Technology again,” the Gigabyte spokesman said.
WD’s Thailand factory is said to be flooded with up to two meters of water. Seagate’s facility remains above water but is running perilously low on components like motors and heads.
In the Taiwanese channel, distributors have begun to hoard the drives, he said, hiking prices by as much as 200 or 300 percent, even though the HDD manufacturers themselves had only hiked their prices up by around 50 percent.
“They don't know how many they will be able to buy and when they will be able to order again,” he said, noting that buyers for the big multinationals like Dell Inc., Hewlett Packard Co. and Acer Inc. were scouring the Chinese market and buying up as many HDDs as possible to stock up in case of acute shortages.
“In some places they are starting to run out already,” he said. “So this will affect everyone.”
It has been reported in the Taiwanese press that even local giants like Asustek Computer expect to see shipments decrease from 6.3 million in the third quarter to six million in the fourth, though analysts believe that could be an underestimation and the figure could be closer to 5.4-5.7 million. Both Micro-Star International (MSI) and ASRock Inc. also expect to see their shipments down by 10 percent as a result of the shortages.
The major hit has been to 2.5-inch drives, rather than the larger 3.5-inch drives more commonly produced in Malaysia or mainland China facilities. The smaller drives are typically targeted at the notebook market, a market which already has incredibly tight margins in order to keep prices affordable for consumers.
“If notebooks become significantly more expensive, people might even start considering the desktop as a cheaper alternative again,” said the Gigabyte spokesman.
“We'll know in four to six weeks what the supply will look like in Q1, 2012, and then things should ease up and prices will normalize,” he said, adding that the flooding could end up having a positive effect on the solid state drive (SSD) market.
“Most people have predicted that SSDs will only become a standard option in about two years’ time,” the Gigabyte spokesman said.
SSDs are still expensive, with half a terabyte costing around $1,000. For every 64GB SSD, one could currently buy a three terabyte HDD, but that’s without factoring in the potential effects of the supply shortages.
“These floods and the combination of other factors will speed up the transition, especially for the notebook makers” Gigabyte’s spokesman posited.