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Western Digital warns of continued HDD shortages

Western Digital warns of continued HDD shortages

Western Digital is warning that its hard drive production volume won't be back to normal until around September.

Storage specialist Western Digital has warned that its production levels will continue to suffer as a result of the flooding in Thailand until at least September, meaning buyers can look forward to several more months of inflated hard drive prices.

The news, which came as part of the company's Q2 financial results, will be a blow for those holding off on upgrading their storage systems in the hopes of prices beginning to fall.

'We have made substantial progress in restoring WD's manufacturing capabilities in the aftermath of the historic flooding in Thailand, and this is reflected in our second quarter financial results and in the resumption of our operations there,' claimed Western Digital's president and chief executive officer John Coyne in a statement following the financial report.

'While much work remains to be done over the next several quarters to reach our pre-flood manufacturing capabilities, the progress thus far is significantly ahead of our original expectations and is a tribute to the dedicated and effective actions of our employees, contractors and Thai government agencies, the efforts of our supply partners and the support of our customers. We are grateful to all involved in this extraordinary effort.'

Although the company continues to ramp production in its Thai facilities, recently resuming slider production that had been on hold since the 10th of October, it will take until September this year for the company to fully reach pre-flood production levels.

Thus far, the company claims that the Thailand floods have cost it in the region of $199 million in charges and expenses, dwarfing the $14 million it has spent this quarter on its planned acquisition of rival storage manufacturer Hitachi Global Storage Technologies (HGST.)

Looking at the figures, it's easy to see the impact the floods have had on Western Digital's business: shipments were down to 28.5 million drives in the last quarter compared to a healthier 52.2 million in the same period last year, while net income dropped to $145 million compared to $225 million last year.

Despite production ramping, our advice remains unchanged: unless you're in desperate need of extra storage, try to make do with what you've got for a few months more if you want to get value for your money.

Are you shocked to see just how much of an impact the flooding had on Western Digital's bottom line, or just impatient for prices to drop back down to a sensible level? Share your thoughts over in the forums.

18 Comments

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Hustler 24th January 2012, 13:18 Quote
Even if production was back to normal today, prices will still be a rip off for months as WD will need to recoup it's lost profits somehow.

Until the accounts are balanced to pre flood levels, prices will not fall much.
Almightyrastus 24th January 2012, 13:20 Quote
:( yup, it's going to take a lot longer than until the end of this year until prices are what they used to be.
yassarikhan786 24th January 2012, 13:23 Quote
Won't affect prices for a while probably like the above have said. So glad I got a 2TB drive before the shortages.
Salty Wagyu 24th January 2012, 13:37 Quote
Why do other hard drive brands continue to be expensive if WD was the only factory affected by floods?
fodder 24th January 2012, 13:46 Quote
Supply and demand -

Overall supply is less and the demand is the same, therefore higher prices.
Deadpunkdave 24th January 2012, 14:38 Quote
Quote:
Originally Posted by Salty Wagyu
Why do other hard drive brands continue to be expensive if WD was the only factory affected by floods?

There are only two manufacturers of HDD's now, and they both have their factories in Thailand.
schmidtbag 24th January 2012, 15:06 Quote
Quote:
Originally Posted by Deadpunkdave
Quote:
Originally Posted by Salty Wagyu
Why do other hard drive brands continue to be expensive if WD was the only factory affected by floods?

There are only two manufacturers of HDD's now, and they both have their factories in Thailand.

yup, and imo it was completely idiotic of them to do it like that. seriously, just because you have a competing product it doesn't mean you have to actually be neighbors. they're FACTORIES not retail stores. i'm not against both of them using thailand for placement of their factories but they could have been a lot more separated geographically.
[USRF]Obiwan 24th January 2012, 15:12 Quote
That is not true, There are a lot of HDD factories worldwide, most of them in Thailand and China.
faugusztin 24th January 2012, 15:17 Quote
Quote:
Originally Posted by [USRF]Obiwan
This is how it is now.

Except the fact, that WD has to sell some Hitachi stuff first :
"Out of concern for the quickly consolidating market, regulators only approved the Western Digital deal after assurances that the company would sell off some its production assets, including a manufacturing plant, and transfer some intellectual property to the new unit being put on the auction block. "

And unfortunately for WDC, the only reason for this is because they sent the letter to EU 1 day later than Seagate/Samsung, so Seagate/Samsung merger was accepted without any questions because they had 2 competitors at the time (WDC & Hitachi), but WDC/Hitachi had only one competitor at the time of merger - Seagate/Samsung... If the order would have been in reverse order, then we are talking now about what Seagate needs to sell from Samsung for successfull merger :D.
damien c 24th January 2012, 15:25 Quote
Luckily I have allot of blank dual layer DVD's and Blu-Ray's because I have spent the last 2 day's backing up everything as my 2tb drives are failing and they are just out of warranty grr.

I just hope the prices come down in the summer as I need new drives but cannot justify paying the price for them at the moment.
faugusztin 24th January 2012, 15:28 Quote
Well, i wouldn't complain that much if my oldest 2TB drive would fail. I paid 155 euros for it at the time (2 years ago i think), the current price for a new one is 135 euros so i would either get a newer model of WD20EARS or a refund, which would mean a new WD20EARX + 20 euros :D.
kzinti1 24th January 2012, 18:27 Quote
Any suggestions as to the best programs to wipe older drives and get them ready for reuse?
I have several that I could recycle but never knew exactly the best way to go about it.
WD Greenies are still pretty cheap but I'd like to reuse what I have. I don't like trashing perfectly good, just older, electronics.
Gareth Halfacree 24th January 2012, 19:27 Quote
Quote:
Originally Posted by kzinti1
Any suggestions as to the best programs to wipe older drives and get them ready for reuse?
Darik's Boot and Nuke (DBAN). Works a treat.
Farfalho 24th January 2012, 21:51 Quote
I do plan on getting my hands on 2TB HDD, low spinning just to store but the prices then were a bit high but now are prohibitive! I guess the only inexpensive way to go it's to buy an SSD, even a 256GB model isn't expensive as they were, set it up as boot drive and the HDD used as boot goes to storage, 250GB extra of storage giving me an hypothetically a JBOD RAID of 1TB which isn't bad at all :D (Have a twin drive (WD RE) and a 500GB Seagate)
Sloth 24th January 2012, 22:31 Quote
Quote:
Originally Posted by schmidtbag
yup, and imo it was completely idiotic of them to do it like that. seriously, just because you have a competing product it doesn't mean you have to actually be neighbors. they're FACTORIES not retail stores. i'm not against both of them using thailand for placement of their factories but they could have been a lot more separated geographically.
Yes, let's call things idiotic because we don't understand them. Wanting to be next to their competitor has nothing to do with it. Instead, both hard drive manufacturers built factories in Thailand because it's the most cost effective place to manufacture hard drives. Thailand provides relatively cheap labor while still being advanced enough to provide the necessary infrastructure for making high tech gadgets. In fact, to not build a factory in a financially advantageous location simply because their competitor had a factory in the area would be petty at best and cause increased prices due to having to build in less profitable areas.

The trick is, the floods were a natural disaster. In an area prone to flooding there were preventative measures taken to reduce flood damage and the architects/engineers planning the construction of each factory likely took this into account to make sure their buildings were safe from typical floods. However, this particular flood was far above normal (hence why it's called a natural disaster) and was beyond the scope of the anti flooding measures in the area. You're better of blaming Mother Nature before Seagate or WD.
benji2412 24th January 2012, 22:44 Quote
Quote:
Originally Posted by Sloth
Excellent points

Government subsidies might have had a lot to do with it as well. Would also be great to have your people collectively trained by competitors in the same field.
kzinti1 31st January 2012, 01:04 Quote
Quote:
Originally Posted by Gareth Halfacree
Darik's Boot and Nuke (DBAN). Works a treat.

Thanks! Boot & Nuke is a name I haven't heard in years. I looked and I still have a copy on a floppy disk. Time to update since there wasn't even SATA back then! Just a mass of thin, flat, ATA cables, guaranteed to slow your airflow to a standstill.
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