During the past two decades, the hard disk industry has consolidated to the point where Western Digital and Seagate, having just devoured Samsung and Hitachi’s disk operations, now produce about 90% of the world’s disk drives. Chasing ever-lower costs, both Seagate and Western Digital have moved much of the final assembly of drives to Thailand as costs rose in Singapore, which was the center of disk drive construction in the '90s and '00s.
Unfortunately, Thailand is now partially under water, facing the worst flooding in the past 50 years. The flooding has devastated much of Thailand, including Bangkok, and many factories are currently under water.
Western Digital’s Thai plants are closed and its other plants in Asia can supply only about 40% of the company's usual capacity. Seagate’s Thai plants are running at the moment, but suppliers of components like heads, spindle motors and the like have had their plants in Thailand shut down, which means Seagate will probably soon run out of parts even if its plants aren’t directly closed due to flooding.
Experts predict the supply chain for drives and drive components will go dry sometime in the first quarter of 2012. I’ve seen estimates that the production shortfall will be as much as 20 million drives a month starting in December.
Given that hard drives are precision devices, factories for drives and their components will take a while to bring back on line after the flooding recedes, and we can’t expect Seagate and WD to build new factories elsewhere in a matter of months, so we should expect hard disks to be in short supply for at least 90 days. I wouldn’t be surprised if it takes until next summer for retail prices to return to recent low levels. At least one component vendor has said it will take several quarters to return its Thai production to normal levels.
Prices are already rising. I bought some 2-Tbyte drives a little over a month ago, and the site I bought them from is currently showing the same drives at almost twice the price. I don’t expect that we’ll see the usual PC, laptop and USB drive bargains in the Black Friday sales circulars this year. Now might be the time to buy the kids new laptop or PC and hide it in the closet.
Array vendors and other large OEMs are protected by long-term price agreements and parts allotments, so those of us that buy drives in small quantities, and BYOD array providers like Promise and Infortrend, are going to be pinched. If you’ve been planning a new system, short stroking 15K RPM drives, SSDs and hybrid systems should start looking even better than they did before. After all, if SSDs have been 20 to 50 times the cost of HDDs and HDDs double in price, the multiples drop to 10 to 25 times.