Hard disk shortage to have minimal impact in Gulf

Dubai: The shortage of hard disk drives (HDD) in computers triggered by the Thailand floods is going to have minimal impact in the Gulf compared to other regions, industry experts said.

"The Middle East and Africa region will not suffer much as vendors will try to leverage as the region offers bigger margins than other regions," Fouad Rafiq Charakla, senior research analyst at IDC Middle East, Africa and Turkey, told Gulf News.

He said only 70 per cent of HDD demand will be met globally and in the first quarter of next year it will go down to less than 70 per cent. A recovery is not expected until the second quarter of next year.

He said IDC expects a 10 per cent fall in Gulf PC shipments in the first quarter of next year. This 10 per cent fall will be absorbed in the second quarter.

Almost all major vendors are feeling the pinch and the prices of HDDs have gone up this month. One scenario is that customers may postpone their purchase of laptops. The other is that vendors may offer lesser HDD capacity than usual offer.

"The PC supply chain says it has sufficient HDD inventory for the fourth quarter of 2011," said Matthew Wilkins, senior principal analyst at Compute Platforms.

"However, those stockpiles will run out in the first quarter of next year, impacting PC production during that period."

According to Digitimes, Western Digital, Seagate, Hitachi and Toshiba are the key players in HDD market. Thailand accounted for 40 to 45 per cent of worldwide HDD production in the first half of 2011, but the floods impacted more than a dozen factories, according to IDC. Thailand is the world's second-largest producer of HDDs after China and is a major supplier of hard drive parts.

‘Great concern'

"The shortage is a great concern," Santosh Varghese, general manager of the computer systems division at Toshiba Gulf FZE, told Gulf News.

"The region should be not much affected. Around 30 per cent of our production is in Philippines apart from Thailand.

"That should help us out compared to other brands and only around 10-15 per cent is outsourced by Toshiba."

Varghese said Toshiba laptop prices have already gone up by around $30 and this is expected to continue in the first quarter of next year.

The HDD industry will begin to recover in second quarter of 2012, and HDD pricing will stabilise by June, with the industry running close to normal in the second half of 2012.

"Around 1.4 million units sold in every quarter in the Gulf are small when compared to sales of one European country." Charakla said.

"Plus European and US crisis will force vendors to focus on this region."

Wilkins said: "Global PC shipments are now expected to expand by only 6.8 per cent next year, down from the previous outlook of 9.5 per cent growth."

The bulk in reduction in shipments will be in the notebook space, he said, which is the area impacted by the HDD shortage. Notebook shipments are expected to rise by 10.1 per cent next year, down from the previous forecast of 13.8 per cent.

He said the HDD market could face an inventory surplus by the end of 2012, after facilities in Thailand return to full production.

When combined with the added production outside the country, the recovery could result in excess supply.