HDD Crisis Generated Massive Revenue

We live in a strange world if a natural disaster turns into a boon, but that is precisely what happened on the hard disk drive market during the first quarter of 2012.

Back in late 2011, there was a flood in Thailand, where most HDD makers and HDD component manufacturers have their factories.

Water reached almost everywhere, leaving Western Digital severely affected and Nidec, a major maker of HDD parts, completely shut down for a while.

Really, Seagate was only one not directly affected, but it, too, had to cope with decreased component shipments.

One would think that the subsequent shortage of HDDs would have caused a large drop in sales and financial income, but the opposite happened.

HDD prices suddenly jumped by 200-300%, though the official word was 10%. After that, because of analysts and companies saying the shortage would last a year, companies and consumers bought as many HDDs as they could, fearing they wouldn't be able to get enough later.

The result was a massive revenue increase for Western Digital and Seagate, one that IHS iSuppli is now confirming.

Verily, the HDD market revenue, during the first quarter of 2012, was huge, a world record. It was far above not just that of Q4 2011 but even that of Q3 2011.

And considering the fact that Q1 is usually the slow season, this was a massive feat.

For those who want numbers, January-March revenue amounted to $9.6 billion / 7.68 billion Euro, even though the 145 million shipments were fewer than those of the third quarter of last year (174 million). Shipment levels will get back to normal only in the third quarter, but prices probably won't ever go back to pre-flood levels.

“Revenue in the first quarter was up because of a rise in HDD average selling prices to approximately $66.28, compared to $51.49 in the third quarter before the flooding,” said Fang Zhang, storage analyst at IHS.

“The ASP will not return to pre-flood levels in the short term and will stay at elevated levels throughout 2012 and 2013, helping the HDD industry make up for some of the losses following the disaster.”