IDC lowers shipment forecast for HDD and PC

Analyst firm downgrades estimates because of Thailand floods

Tags: HDDIDC Middle East and Africa
  • E-Mail
IDC lowers shipment forecast for HDD and PC Widespread flooding in Thailand will impact global HDD & PC shipment in first half of 2012, says IDC.
By  Manda Banda Published  November 15, 2011

As widespread flooding has continued to cause havoc that has brought unprecedented devastation to the people and economy of Thailand, research firm IDC says in its latest reports that worldwide HDD and PC shipments through the first half of 2012 will be impacted.

IDC stated in the report that with operations disrupted at more than a dozen hard disk drive (HDD) factories, damage to the HDD industry is significant.

According to the IDC, in the first half of 2011, Thailand accounted for 40 to 45% of global HDD production. However, as of early November, nearly half of this capacity has been directly impacted by the flooding. In addition to assembly and component facilities being inundated with water, the industry faces work stoppages due to poor access and power outages. The full extent of the damage to HDD industry factories will not be known until the floodwaters recede, although it is already clear that there will be HDD supply shortages way into the first quarter of 2012, says IDC.

"In response to the crisis, priority will be given to the large PC manufacturers that drive HDD shipment volumes, as well as to the high-margin products used in enterprise servers and storage," said John Rydning, research vice president, Hard Disk Drives and Semiconductors, IDC. "But the HDD vendors can't neglect their smaller customers, whose business will continue to be important once capacity is fully restored. Some interesting production and partnering arrangements with customers can be expected as HDD vendors scramble to bring production back up while simultaneously angling for a strategic advantage."

"The HDD shortage will affect smaller PC vendors and lower priced products most, including mini-notebooks (netbooks), emerging markets and entry-level consumer PCs. However, even the largest vendors are expected to face HDD shortages, particularly for portable PCs where the market is more consolidated," added Loren Loverde, programme vice president, IDC Worldwide Consumer Device Trackers. "Nevertheless, the shortage will relieve some pressure on pricing and margins, and present some opportunities for strategic share gains among the larger players."

In the Middle East, the impact of the floods has already started to show in the channel with prices for HDD having gone up by more than 30%. Industry pundits say while the shortage will affect the PC and system builder channel more than the multinationals, the situation presents an opportunity for system and PC builder to develop their own local market

A channel source close to the matter has revealed that resellers with a ‘trader' mentality in Dubai are already taking advantage of the shortages in the channel and have started to re-export HDDs that are already in supply to Europe and Asia.

"We are concerned that some unethical resellers want to ‘hijack' the situation and cause further disruption especially to smaller PC assemblers in the local channel," the source said. "Instead of resellers utilising this situation to grow their PC assembly and system builder channel, they are going all out to buy whatever stock they can find here and re-export it to these two regions for an additional $20 per HDD that they stand to make."

The severity of HDD shortages in the coming months largely depends on the industry's ability to recover lost production capacity in Thailand. While IDC believes HDD industry participants will recover and restore HDD production capacity relatively quickly, HDD supply will remain constrained for an extended period of time. The analyst company urged PC vendors to plan for this and expect significant HDD shortages by mid-November 2011 that will continue into the first quarter of 2012.

IDC stated that a large part of PC production for the Q4 of 2011 shipments has already taken place or can be completed with existing HDD inventories, limiting the impact on Q4 PC shipments to less than 10%. But in a worst-case scenario, total PC shipments could be depressed by more than 20% in the first quarter of 2012 versus previous forecasts as a result of the HDD shortage, IDC says.

The analyst firm expects higher HDD prices as demand exceeds supply and manufacturers face increased costs for components, expedited shipments and shifting of production to new locations.

IDC stated in the report that as the HDD industry begins to recover in the first quarter of 2012 and HDD prices stabilise by June, the industry will be close to normalcy in the second half of 2012. The analyst company added that this is the opportunity for larger PC vendors to capture enterprise accounts from smaller competitors and accelerate industry consolidation, particularly in faster growth markets.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code