Hard Drive Prices Spike on Thailand Flooding

Subject: General Tech, Storage | October 27, 2011 - 01:00 PM |
Tagged: wdc, shortage, Seagate, Samsung, hitachi, hdd, Hard Drive

Chances are good you have heard about the recent flooding in Thailand - as Yahoo puts it: "The country's worst flooding in half a century, caused in part by unusually heavy monsoon rain, has killed 373 people since mid-July and disrupted the lives of nearly 2.5 million."  Obviously this is a horrific disaster and we feel for the people affected by it.

But there is a tech angle to the story that has been showing up in many of our discussions as late and is the impact this disaster has had on the production of spindle-based hard drives.  Looking for a 2TB hard drive today on Newegg.com this is what I found:

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Prices for hard drives have sky rocketed in the last week or so due to the pending shortage of them across the world.  Many of the top manufacturers have facilities based in Thailand for production as well as partners that are responsible for supplying companies like Western Digital, Seagate, Samsung and Hitachi with the parts they need to produce platter-based drives. 

While we used to talk about finding 2TB hard drives in the $89 price range, the best prices we could find on comparable units today start at $129; and this is for the slower units.  Western Digital Caviar Black drives are starting at unit prices of $229 now!

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Pricing graph from Pricegrabber.com for Western Digital Caviar Black 2TB

If you are careful and shop around, you can still find drives like this for the $149 price point at sellers like Amazon are bit slower to update their prices.  (Scratch that, after publication this was already at $199!)  But don't just blindly purchase drives at this point - do your research!

WD drives aren't the only ones affected.  When doing a search for a Seagate 2TB drive, these were our results:

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When asked for comment, a representative of one of the affected manufacturers expressed concern for the people of Thailand first, but when pressed, said:

"The entire hard drive business is affected. Two of our factories are inundated with water, which supports 60% of our output. But a ton of suppliers that the entire industry uses are also flooded so we are all impacted."

While looking over at WD's press center we found this comment from John Coyne, President and CEO:

In mid-October, to protect our employees and our equipment and facilities, we temporarily suspended production at our two factories in Thailand, which have been inundated by floodwater. In addition, many of our component suppliers have been impacted, leaving material for hard drive production considerably constrained. We are working with suppliers to assess the extent of their impact and help devise short- and long-term solutions. This is a complex and dynamic challenge that will require extensive rebuilding for the Thai people and government, and present unprecedented obstacles to the hard drive industry for multiple quarters.

Obviously with a majority of the facilities affected we can only expect these prices hikes to increase and to linger.  That fact that Coyne specifically notes "multiple quarters" indicates that users likely won't see a return to the pricing we were used to until at least mid-2012.  With competition from solid-state drives heating up, this could be bad timing for companies dependent on spindle drives as the driving revenue source: comparing a $300 SSD to a $90 standard drive is a much different decision than that same $300 SSD and a $240 standard drive of high capacity. 

According to this report from Xbit labs, the industry has "two to four weeks" of hard drive inventory available.  The author claims that this points to the situation not being so dire, but with the WD's CEO stating the effects will be seen for "multiple quarters", I am guessing we will see a major buy-up of inventory from system builders like HP and Dell that will cause drive shortages much more quickly than anticipated.  

PC Perspective will keep tracking the effects on driving pricing and if any player in the business has other input they want to offer us.  Stay tuned!

October 27, 2011 | 02:57 PM - Posted by Bill (not verified)

I paid under $50 shipped for my 3 Samsung 1tb drives during the summer when Newegg had them for Shell Shockers or during other sales. I see the same drives are now up to almost $90 with shipping!

Another thing to consider. What happens when you have a hard drive failure now? Will you be able to get a warranty replacement from the manufacturer because of the shortages?

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October 27, 2011 | 08:37 PM - Posted by Tim Verry

Considering I got a 2TB Samsung Spinpoint for ~80 bucks, these new prices are ridiculously high and I'm glad I bought my drive when I did! :P

October 27, 2011 | 09:57 PM - Posted by Ryan Shrout

I am kind of wishing I had bought about 10 2TB drives last month now...

October 27, 2011 | 11:41 PM - Posted by Tim Verry

Agreed!

October 28, 2011 | 05:01 AM - Posted by Bryan (not verified)

Looks like companies need to look to diversify locales for facilities a bit more.

October 31, 2011 | 08:01 AM - Posted by Anonymous (not verified)

You're right Bryan, there should be more diversity in the tech production market in general. Of course if you bring theses jobs to the USA the price would get even higher. What would we do if we could not buy a disk drive, use USB's or live CDs?

November 2, 2011 | 11:08 AM - Posted by Kevin (not verified)

I don't know. Most things in this business are made in China or Taiwan. Thailand is a nice change. Well, except for the flooding.

November 2, 2011 | 02:20 PM - Posted by Anonymous (not verified)

The only reason they moved from China to Thailand is that the labor is cheaper there. The Chinese are getting used to a better way of living and labor has been going up there for several years.

November 15, 2011 | 04:05 PM - Posted by llew (not verified)

crap i just bought 2 64 ssd's instead of another tb black for the same price

December 30, 2011 | 10:14 AM - Posted by FDunn (not verified)

Yes, regardless of the cause of the mechanical HDD problems it appears that now the SSD is going to be a more atractive purchase.

If ever there was "sweet spot" timing and relative price comparison for SSD's over HDD's, this is it.

Also while SSD's have suffered higher prices due to lower volume, this could easily change now.

If WD and Seagate don't start pricing there core products more reasonably then I see the SSD's taking their place in drive bays everywhere.

This is what happens when these companies in search for cheap sweat-shop labor "put all their eggs in one basket".

I have enough new spares for now but when I need to order for new builds then I will probably be going to the SSD's.

FD

January 14, 2012 | 02:56 AM - Posted by Anonymous (not verified)

This signifies the monopoly of Seagate and WD and the bad condition of the HDD market -- no competition similar with Microsoft which enforced monopoly by kill all competition using malpractices.

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