HDD shortages and price rises to hit distribution

The fallout from the Thailand floods is going to be price rises and shortages for months to come with the costs passed on through the supply chain by OEMs likely to rise by 5%. An analysis of the consequences of the impact of the Thai floods on the hard disk drive market from Citi Group has warned

The fallout from the Thailand floods is going to be price rises and shortages for months to come with the costs passed on through the supply chain by OEMs likely to rise by 5%.

An analysis of the consequences of the impact of the Thai floods on the hard disk drive market from Citi Group has warned that not only will there be shortages but OEMs, who will get stock priority, will have to pay higher prices.

OEMs will get stock ahead of the open channel causing the shortages to be felt most severely by distribution, warned the analysts.

Citi expects a shortage of 20-25m a quarter for the next six months with a warning that it will be in distribution where the impact is felt the hardest.

"Distribution, including the white-box PC market, should experience the bulk of the shortage," Citi added it was "already seeing significant increases in HDD pricing in the channel." There is also a warning that panic buying is going to cause price spikes in distribution.

The other impact of the floods will be to give a leg-up to those vendors that have not been too badly impacted by the natural disaster, particularly Seagate and Samsung, with Western Digital the largest victim of events.

Dave Stevinson, sales director at VIP Computers, said that the reports coming out of Thailand continued to cause concerns.

"The undetermined date for resumption of operations at the downstream component and sub-assembly manufacturers is particularly concerning," he said.

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