A vendor at an IT mall in Jiaxing, Zhejiang province, holds up hard disks that made in Thailand. [Photo/China Daily]

Elevated costs of storage units may continue until 2012, analysts say

BEIJING - The price of hard disk drives (HDDs) is rising as devastating floods in Thailand cripple production. Analysts suggest that the effect could last until the end of the first quarter of 2012.

HDD prices have gone up by nearly 50 percent in Beijing after "the worst flooding for half a century" hit the world's second-largest HDD producer.

The price of a 500 gigabyte HDD jumped 56 percent to about 470 yuan ($74) from less than 300 yuan two weeks ago, said venders at an electronics market in Zhongguancun, the largest electronic device distributing center in Beijing.

Thailand provides around 40 percent of the international HDD supply, making it the world's No 2, after China.

"As the flooding hit Thailand's semiconductor manufacturing plants, 80 to 90 percent were HDD-related," said Wang Yang, an analyst at iSuppli Asia Shanghai Ltd.

He suggested that the effects of the disaster on global HDD prices are likely to last until the end of the first quarter of next year.

The flood has affected about 3 million households and 9.9 million people in more than 80 percent of the Thai provinces since July 25. As of Tuesday, the disaster had claimed 384 lives across the country, authorities said.

Research company IHS iSuppli predicted that total drive shipments could fall 28 percent, to 125 million units from 173 million in the third quarter. That's the biggest drop since 2008.

Top HDD makers such as Western Digital Corp, Toshiba Corp and Seagate Technology LLC all have manufacturing plants in Thailand.

Western Digital announced on Oct 26 that it had closed its plants in Thailand because of the worsening situation.

Toshiba said 90 percent of its manufacturing plants in Thailand have halted production, adding that the current situation made it hard to predict when production could be resumed. Previous reports show Toshiba had switched some of the production to its Philippines plant.

Chinese personal computer (PC) maker Lenovo Group Ltd also expressed concern over the HDD supply. It said shortages may occur in the first quarter of 2012.

Meanwhile, Seagate has lowered its prediction for fourth-quarter global HDD production from 55 million units to 40 to 45 million units.

However, Wang believes the HDD shortage will cause limited damage to the world PC industry.

"The world's top PC makers will put their main effort into 'ultrabooks' by 2012, and the demand for HDDs is expected to drop in the future," he said.

An ultrabook is a type of thin and lightweight laptop, and the solid-state drive will be widely used in the next-generation laptop instead of HDDs.

In Beijing, laptop prices remained stable after the HDD price hike.

Hewlett-Packard Co and Toshiba said their PC supply in China is unlikely to be affected as their PC sector is not in Thailand.

In addition, Wang believes that the HDD manufacturers are unlikely to move their production lines to China. "The labor cost in China is growing, and plants are moving out rather than moving into China," he said.