Floods: Hard drives jump in price
published : 27 Oct 2011 at 13:24
writer: Jon Fernquest
With 25% of global hard drive production in Thailand, a global shortage & 20% price hikes for many months projected.
Photo above of the Ayutthaya hard drive motor plant of Japan's Nidec Corporation. Production has been relocated to a factory in Pathumthani.
Click button to listen to Hard Drive Price Increase to download
Computers expected to become pricier, Shortage of drives leads to 20% hike by Suchit Leesa-nguansuk
A shortage of hard-disk drives (HDD) has resulted in their prices spiking 20%, with computer prices expected to rise by 500 to 1,000 baht next month as a result.
While its Ayutthaya plant remains swamped, Japan’s Nidec Corp, which makes hard drive motors, resumed production at its factory in Pathum Thani on Tuesday.
Thailand's worst flooding in seven decades may lead to a global shortage of drives through the first quarter of next year, as Thailand is the world's second-largest exporter of HDDs behind China, with 25% of worldwide HDD assembly facilities located locally.
Panuwat Khantamoleekul, managing director of Supreme Distribution (Thailand), a local computer vendor under the DTK brand, said prices of entry-level HDDs with a capacity of 500 to 1,000 gigabytes had increased between 300 and 400 baht or 20% as a result of flooding.
Typically, computer makers and dealers have one to two months of HDDs in stock to avoid dynamic pricing and outdated technology risk.
Vira Intanate, chief executive officer of SVOA Plc, a local computer maker and distributor, said HDD prices rose by 25% in the market in the past two weeks and there was a shortage.
The ongoing merger and acquisition deal between Seagate and Toshiba along with Western Digital Corp (WDC) and Hitachi Global Storage Technologies has also slowed HDD production the past few months.
"We are looking to outsource [HDDs] from other countries, particularly China, Hong Kong and Singapore," Mr Vira said.
Mr Panuwat added that prices of RAM (random-access memory), another computer component, also rose by 3-5%, and computer prices are expected to increase by 500 to 1,000 baht next month.
Fang Zhang, an analyst for storage at iSuppli, a global memory and storage market research firm, said WDC and Toshiba had temporarily halted production of HDDs in Thailand.
WDC, the world's largest HDD manufacturer by volume, has 37,000 workers in Thailand and production here accounts for 60% of the company's total capacity. In the second quarter WDC made 53.8 million drives, giving it a 32% share of the global market.
Toshiba employs 3,900 workers and approximately 50% of its manufacturing capacity is in Thailand. In the second quarter, Toshiba was the fourth-ranked HDD supplier, with 17.8 million units and a 10.6% share.
The HDD suspension assembly maker Hutchinson Technology also temporarily stopped operations in Ayutthaya due to flooding and a loss of power. It plans to increase output at its US plant and will use existing inventory to meet customer demand.
Japan's Nidec Corp restarted its motor factory No. 1 in Bangkadi Industrial Park in Pathum Thani on Tuesday, after production was halted due to floods. Its factories in Pathum Thani and Ayutthaya supply more than 70% of all global HDD motors.
Nidec's shares have been flirting with seven-month lows on concerns about the impact of the Thai floods on its supply chain. Nidec added it would start making HDD motors in the Philippines and China to offset lost output.
(Source: Bangkok Post, Computers expected to become pricier, Shortage of drives leads to 20% hike, 27/10/2011, Suchit Leesa-nguansuk, link)
Hard Disk Drive Supply and Demand Vocabulary
supply and demand - in a competitive market for a good the price of the good changes until it settles at a point where the quantity demanded by consumers (at current price) will equal the quantity supplied by producers (at current price), so that "supply equals demand" at a "market clearing price" (See Wikipedia)
hard-disk drive (HDD) - the small storage device in computers that can store several gigabytes (GB) of data (See Wikipedia)
shortage - when there is not enough of something การขาดแคลน
shortage of hard-disk drives (HDD)
shortage of drives leads to 20% hike - fewer hard drives (drop in supply) and the same demand means price rises
global - throughout the world; all over the world, including the whole world ทั่วโลก ทั้งโลก
global shortage of drives through the first quarter of next year
expected - believe will happen คาดว่า (จะเกิดขึ้น)
expected to become pricier - believe that price will increase in future
prices spiking 20% - prices increasing by 20% quickly and suddenly
component - a part which combines with other parts to form something bigger ส่วนประกอบ,ส่วนเสริม
computer component - a part used to build a computer (memory, hard drive, CPU, case, etc)
random - happening, done or chosen by chance rather than according to a plan ซึ่งไม่มีแบบแผน
access -entering a place ทางเข้า
memory - something that you remember from the past; the ability to remember information, experiences and people ความจำ
computer memory - (in a computer a "memory chip" remembers data for a period of time to help the computer do its job)
RAM (random-access memory) - the technology used to make computer memory chips with very fast access times, much faster than hard drives (See Wikipedia)
storage - the putting and keeping of things in a special place for use in the future การเก็บ
computer storage - components or parts inside the computer (memory, hard drive) that are used to keep and store data
hierarchy of storage - levels of data storage in a computer ranging from computer memory with low capacity but fast access time to hard drives with high capacity and slower access time (See Wikipedia)
capacity - storage capacity, the amount of data that can be stored on a storage device such as a hard drive
entry-level HDDs with a capacity of 500 to 1,000 gigabytes
manufacturing capacity - the amount of goods or product that can be produced in a factory ความสามารถในการ (ผลิต)
firm - a business or company บริษัม
research firm - a company that does research for other companies
global memory and storage market research firm
swamped - having too many problem or too much work to deal with at one time ที่มีปัญหามากเกินรับไหว
plant remains swamped - the factory has too many orders to produce at one time (orders greater than capacity)
worst - most + bad
decades - periods of ten years เป็นสิบๆปี
worst flooding in seven decades
facilities - buildings, equipment and services for a special purpose สถานที่และสิ่งอำนวยความสะดวก สิ่งอำนวยความสะดวก
25% of worldwide HDD assembly facilities located locally.
local - in this country (here: Thailand)
vendor - seller of goods, either: 1. a large company; or 2. a small shop พ่อค้า, แม่ค้า
brand - a type of product made by a particular company ตรา, ยี่ห้อ
local computer vendor under the DTK brand
entry-level - the simplest and cheapest model in a product range (the first one that people buy when they "enter" the market for the first time)
product range - a set of related products (with increasing features for increasing price)
model - one version or kind of product in a product range (with certain features for a certain price)
stock - an amount of something that you keep so that you can use it when you need it ที่เก็บไว้ในสต๊อก
one to two months of HDDs in stock
dynamic - moving and changing all the time (opposite: static, at rest, not moving)
dynamic pricing - when the price of a good or product is changing all the time (going up and down)
outdated - old and not currently being used, old-fashioned
risk - danger, how likely or possible it is for a bad event that causes harm and damage ความเสี่ยง
outdated technology risk - if a store keeps products in inventory too long, then they will have old overpriced products that no one wants to buy
ongoing - currently happening; happening at the present moment; continuing (has not finished yet) ไม่หยุดยั้ง, ต่อเนื่อง อย่างต่อเนื่อง
merger - joining together, when two companies become one company การรวมบริษัท การรวมเข้าด้วยกัน
acquisition - when one company buys another company
ongoing merger and acquisition deal
outsource - hiring someone outside of the company to do some work
looking to outsource - planning or thinking about outsourcing work to other countries
we are looking to outsource [HDDs] from other countries
temporarily - only for a limited time; not permanent ชั่วคราว
halted - stopped
temporarily halted production of HDDs - factories stopped making hard drives for a period of time
volume - the quantity or amount of something
the world's largest HDD manufacturer by volume - is the company that produces the largest number of hard drives
share - market share
market share - the percentage (%) of customers in a market for some product that a company has
a 32% share of the global market.
the fourth-ranked HDD supplier - is the fourth largest seller of hard drives in the world
suspension - things in a device such as springs that allow smooth movement and operation (prevents sudden damaging movements) (See Wikipedia on vehicle suspension)
HDD suspension assembly
power - energy in the form of electricity produced in large quantities and used to operate lights, machines, and heating
loss of power - no electricity (a brown out)
inventory - the products kept in a shop, warehouse, etc., in this case, unsold cars สินค้าที่จัดเก็บในสต๊อก
demand - the need and desire to buy goods and services by households and businesses
will use existing inventory to meet customer demand.
flirting with seven-month lows - very close to being the lowest in seven months (but has not reached there yet)
concerns - worries ความกังวล
supply chain - the many steps in producing a final product for sale in stores; starting with raw materials, different parts are produced in different factories and then assembled into a final product (See Wikipedia)
impact - an effect or influence ผลกระทบ
impact of the Thai floods on its supply chain
offset - reduce by moving in the opposite direction, counter-balance, compensate in the opposite direction ("x offsets y" means "x reduces the effect of y"), make up for (profits from the manufacturing business offset losses from the retail business) (See glossary)
offset lost output - an increase in output, after a decrease in output