Prices of hard disk drives (HDDs) have shot up by as much as 50
percent over the past one week alone, on the back of heavy floods in
Thailand.
According to iSupply, a components research agency, the flooding disaster in Thailand has hampered the hard drive supply chain. The agency also believes that the shortage may plague PC, server and storage vendors in the months to come.
Thailand accounts for nearly 25 percent of the global HDD production and the country is also home to manufacturers that make several critical components that go into the making of HDDs, especially mechanical parts such as motors.
Western Digital has already issued a statement suggesting that its Q4 revenues may slip by as much as 60 percent compared to Q4 2010 due to the natural disaster in Thailand. According to the press statement, around 60 percent of Western Digital's HDD production capacity is in Thailand.
"Seagate expects that the industry demand will significantly outstrip supply at least for the December quarter, and the supply disruption will continue for multiple quarters. Our production is NOT constrained by either internal component supply or by our ability to assemble finished product. Rather, we are constrained by the availability of specific externally sourced components. We are aligning production schedules and product builds to best support both our suppliers and our customers," said Rajesh Khurana, Country Manager, Seagate India.
The street price of 500GB SATA drive, which was Rs 2,050 last week, has suddenly shot up to Rs 3,200 in just a few days in all major cities.
“There is suddenly no supply of HDDs in the market. We are finding it difficult to explain the sudden price hike. Prices for 500GB HDD has shot up by Rs 1,000 since the past couple of days,” said Dinesh Nair, VP, Aldous Glare Systems, a prominent sub-distributor in South.
Many in the channel have expressed shock at such a sudden rise in prices of HDDs. Some are alleging black marketeering.
“The flooding in Thailand happened two weeks back. World came to know about its potential impact a week back. In India, most distributors have good stock of HDDs owing to the Diwali season. So, in our estimate, the sudden hike in prices is not a knee jerk reaction. We believe there is a strong element of black marketeering among the distributors and sub-distributors. They have formed a cartel to gain out of this situation. If one looks at the global prices they have not increased much but in India they have gone up by more than 50 percent,” said Toshy Mathew, President, AKITDA (Ernakulam District).
Pricewatch.com and iSupply do not indicate any spike in the global spot market prices of HDDs as on October 24, 2011, which shows some merit in Mathew's allegations.
AKITDA has called for a meeting of its members to discuss the price hike and analyze the element of black marketeering. “We will not allow distributors and importers to form a cartel and create artificial short supply. We will be writing to them and the vendors to explain the sudden and acute rise in prices of HDDs,” opined Mathew.
Nair of Adlous Glare said that he would not be surprised if HDD prices went up by another 20-30 percent in the coming days. “We are trying to arrange as much stock to support our partners.”
“In the next few months hoarding of HDDs would be an activity many distributors would indulge in globally and in India. And unless any clarity emerges about when the production from Thailand will normalize, there will be quite a few price fluctuations in the market,” said J Ramesh, VP, Ralco Synergy, Chennai.
According to iSupply, a components research agency, the flooding disaster in Thailand has hampered the hard drive supply chain. The agency also believes that the shortage may plague PC, server and storage vendors in the months to come.
Thailand accounts for nearly 25 percent of the global HDD production and the country is also home to manufacturers that make several critical components that go into the making of HDDs, especially mechanical parts such as motors.
Western Digital has already issued a statement suggesting that its Q4 revenues may slip by as much as 60 percent compared to Q4 2010 due to the natural disaster in Thailand. According to the press statement, around 60 percent of Western Digital's HDD production capacity is in Thailand.
"Seagate expects that the industry demand will significantly outstrip supply at least for the December quarter, and the supply disruption will continue for multiple quarters. Our production is NOT constrained by either internal component supply or by our ability to assemble finished product. Rather, we are constrained by the availability of specific externally sourced components. We are aligning production schedules and product builds to best support both our suppliers and our customers," said Rajesh Khurana, Country Manager, Seagate India.
The street price of 500GB SATA drive, which was Rs 2,050 last week, has suddenly shot up to Rs 3,200 in just a few days in all major cities.
“There is suddenly no supply of HDDs in the market. We are finding it difficult to explain the sudden price hike. Prices for 500GB HDD has shot up by Rs 1,000 since the past couple of days,” said Dinesh Nair, VP, Aldous Glare Systems, a prominent sub-distributor in South.
Many in the channel have expressed shock at such a sudden rise in prices of HDDs. Some are alleging black marketeering.
“The flooding in Thailand happened two weeks back. World came to know about its potential impact a week back. In India, most distributors have good stock of HDDs owing to the Diwali season. So, in our estimate, the sudden hike in prices is not a knee jerk reaction. We believe there is a strong element of black marketeering among the distributors and sub-distributors. They have formed a cartel to gain out of this situation. If one looks at the global prices they have not increased much but in India they have gone up by more than 50 percent,” said Toshy Mathew, President, AKITDA (Ernakulam District).
Pricewatch.com and iSupply do not indicate any spike in the global spot market prices of HDDs as on October 24, 2011, which shows some merit in Mathew's allegations.
AKITDA has called for a meeting of its members to discuss the price hike and analyze the element of black marketeering. “We will not allow distributors and importers to form a cartel and create artificial short supply. We will be writing to them and the vendors to explain the sudden and acute rise in prices of HDDs,” opined Mathew.
Nair of Adlous Glare said that he would not be surprised if HDD prices went up by another 20-30 percent in the coming days. “We are trying to arrange as much stock to support our partners.”
“In the next few months hoarding of HDDs would be an activity many distributors would indulge in globally and in India. And unless any clarity emerges about when the production from Thailand will normalize, there will be quite a few price fluctuations in the market,” said J Ramesh, VP, Ralco Synergy, Chennai.
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