Although production of hard-disk drives is rapidly recovering from the catastrophic Thailand floods that occurred last October, average selling prices are not expected to decline to pre-disaster levels until 2014, according to IHS.
In the wake of the floods, the average selling prices for the entire HDD market shot up to $66 in the fourth quarter of 2011, up 28 percent from $51 in the third quarter. Prices held steady at $66 in the first quarter and are expected to decline marginally to $65 in the second quarter, IHS said in its iSuppli Memory & Storage Market Brief.
Because production is concentrated in the hands of a few large manufacturers, they have been able to keep price high.
Thailand’s share of global HDD production is estimated at 40 to 45 percent, and at least half of that capacity was directly affected by the floods.
Meanwhile, after flooding caused a 29 percent plunge in shipments in the fourth quarter, HDD production is rising and will recover completely by the third quarter.
Shipments rose by 18 percent to 145 million in the first quarter and by 10 percent to 159 million in the second quarter.
In the third quarter, HDD shipments are expected to rise by another 10 percent to 176 million. This will mark the first time in 2012 that shipments will exceed their 2011 quarterly levels, up from 173 million in the third quarter of 2011.
Despite exceeding pre-flood shipment levels in the third quarter, pricing is expected to remain inflated.
“HDD manufacturers now have greater pricing power than they did in 2011, allowing them to keep ASPs steady,” said Fang Zhang, analyst for storage systems at IHS. “With the two mega-mergers between Seagate/Samsung and Western Digital/Hitachi GST, the two top suppliers held 85 percent of HDD market share in the first quarter 2012. This was up from 62 percent in the third quarter of 2011, before the mergers. The concentration of market share has resulted in an oligarchy where the top players can control pricing and are able to keep ASPs at a relatively high level.”