The hard disk drive supply chain was hit hard late last year when a series of floods hit Thailand. The Asian country accounts for about a quarter of the world’s hard drive production, but thousands of factories had to shut shop for weeks because the facilities were under water, which is considered the world’s fourth costliest natural disaster according to World Bank estimates. This is on top of the human cost of over 800 lives.
Western Digital and Toshiba had factories in flooded areas, while Seagate was primarily affected by supply constraints as a result of trading partners who were forced to halt production of related components. Among them was Nidec, which produces ~70% of the world’s hard drive spindle motors.
This all resulted in an increase in hard drive prices around the end of October as production became more expensive and limited. We checked several mobile and desktop HDDs with the help of price tracking site Camelegg to get a better overview of how the situation has evolved over the past three months.
We saw the first acceleration in late October, reaching its peak in the first week of November, with price increases in the 80-190% range for desktop drives and 80-150% for mobile units. Although we’re starting to see prices drop across the board, drives on average are about 60-90% more expensive than they were before the flood.
The graph below shows Newegg prices from mid-September 2011 to February 1, 2012.
desktop hard drive prices
It appears that some drives have been affected more severely than others. For example, the Seagate Barracuda XT 3TB currently costs $429.99, which is 138% more than its pre-flood price of $179.99. The Hitachi Deskstar 7K3000 is selling for double the price in early October. Let’s look at similar data for mobile-oriented hard drives.
notebook hard drives prices
On the mobile side of things the Western Digital Scorpio Black 75GB and 500GB are marked down 155% and 100% respectively today. Announcing its quarterly results earlier this week, Seagate acknowledged that hard drive shortages will continue throughout the 2012 calendar year, with demand supplying approximately 150 million units by the end of 2012. Western Digital backed this up, saying that their Thailand facilities in construction would start running at full capacity in the September quarter.
Interestingly, Western Digital’s earnings fell nearly 36% to $145 million compared to the same period a year ago, while Seagate actually posted a net profit of $150 million to $563 million in the same time frame. The company says it has made long-term agreements with a number of customers to close pricing, with some deals going on for several years to ensure continuity of HDD supply. This has worked wonderfully for them but unfortunately for end users it is unlikely that prices will return to pre-flood levels as long as the shortage continues.