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HDD shortages to take toll on components channel

As shortages continue in light of Thailand floods, channel warned to brace for a hit

HDD shortages to take toll on components channel
Hard drive shortages are expected to continue until the end of Q1 in 2012, says Tantawi.

As flooding in Thailand continues to wreak havoc on the hard drive industry, shortages will soon create a trickle-down effect, disturbing DRAM, PC supply chains and the system builder channel, Hesham Tantawi, vice president, Middle East Turkey and Africa at components distributor Asbis has warned.

According to Tantawi, the hard drive industry in Q4 will see its worst sequential decrease.

Tantawi said the shortages are expected to continue until the end of Q1 in 2012 as Hitachi, Toshiba and WD have all been affected by the shortage.

He said this shortage is predicted to boost average hard drive disk pricing for dealers by 20%  in the fourth quarter in the Middle East.

According to a report by analyst firm IHS iSuppli, Thailand-based hard drive manufacturers such as Western Digital and Toshiba have already been forced to halt production. In light of the stoppage, Western Digital may lose its number-one spot for most worldwide hard drive shipments in Q4, falling to third, stated IHS iSuppli in its report.

Tantawi said as hard drive shipments continue to decline, effects on PC production seem almost inevitable. "These shortages will have the greatest impact on notebook PCs, as many of the plants ravaged by the flooding produce components for mobile computing," he said. "We should expect pricing on hard drives and notebooks to go up by between 20 to 30% here in the region. We have been forced to cut our backlog orders," he said.

He said current hard drive inventory levels in the region may not sustain the market for the remainder of the year and first quarter in 2012. "We have as a components player in the region been affected by the shortages and I don't foresee the current inventory in the market sustaining for another two weeks," he said.

Tantawi added that this is not a challenge that can be resolved by the Middle East component channel as most system builders including the multinationals will start to raise prices.

He warned that because of the precarious nature of the component business in the Middle East, these shortages will led to grey marketing increasing as resellers look for alternative suppliers of hard drives.

Analysts predict that a prolonged shortfall in demand will push up prices of drives, with a knock-on effect for all the major PC manufacturers and system builders in the Middle East channel.

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