HDD rankings: Seagate ousts Western Digital after Thailand floods

February 29, 2012 — Seagate Technology LLC recaptured the lead in hard disk drive (HDD) shipments during Q4 2011, ousting Western Digital Corp. thanks to "a fortuitous accident in geography" that kept Seagate’s Thailand HDD manufacturing plant out of the floods last year, said IHS.

Seagate shipped 46.9 million HDD units worldwide in Q4, compared to 28.5 million for Western Digital, which suffered heavy manufacturing losses in the floods, shows IHS iSuppli’s Storage Space Market Brief. Seagate’s Q4 shipments fell 8% from Q3, whereas Western Digital saw a 51% decline. HDD shipments from the industry’s top-5 manufacturers (Seagate, Western Digital, Toshiba, Hitachi Global Storage Technologies and Samsung Electronics) retreated sharply in the fourth quarter to 123.3 million units, down 30% from Q3.

This is Seagate’s first time atop the rankings in 2 years. It is a long-standing leader in HDD revenues, however, as it supplies higher-margin products.

The new rankings mean that Seagate in the fourth quarter controlled 38% of overall HDD shipments, Western Digital 23%, Toshiba 16%, Hitachi GST 14%, and Samsung 9%.

Table. Worldwide HDD shipment ranking in Q4 2011 vs Q3 2011 (Millions of units). SOURCE: IHS iSuppli Research, February 2012.
Company Q4 shipment units (M) Q4 market share (%) Q3 shipment units (M) Q3 market share (%)
Seagate 46.9 38 50.8 29
Western Digital 28.5 23 57.8 33
Toshiba 19.3 16 22.2 13
Hitachi GST 17.2 14 31.9 18
Samsung 11.3 9 12.5 7
Total 123.3 100 175.2 100

Seagate’s ability to avoid the October Thai floods, which were the most destructive in 50 years, led to this top ranking, observed Fang Zhang, analyst for storage systems at IHS.

Also read: Thai flood update – HDD production returning at expected pace

Both Seagate and Western Digital saw their gross margins rise to record highs in the fourth quarter, due to across-the-board price increases in the wake of flood-related HDD shortages. Seagate, which had a long-term goal to reach gross margins in the 22 to 26% range, actually achieved the 32% level in the fourth quarter, thanks to higher average selling prices (ASP) of HDDs. Seagate’s ASP surged from $55 in the third quarter to $68 in the fourth—a strong 24 percent upswing. Western Digital also attained a company record with gross margins at 32.5% during the same period, after its ASP soared to $69, up from $46. Given the expected HDD shortages for the first half of this year and Western Digital’s long road to recovery, Seagate’s gross margin is expected to remain at the 30% level throughout 2012.

Pricing will start to decline at the end of the first quarter this year for some HDD products, with component shortages finally easing and production increases kicking in from plants that had escaped flooding. ASPs will not return to preflood levels anytime soon, especially because there will be fewer manufacturers left after both Seagate and Western Digital complete their individual buyouts of Samsung and Hitachi GST, respectively. Toshiba also announced today that it will acquire certain Western Digital 3.5" HDD manufacturing equipment and related intellectual property (IP). Western Digital will take over Toshiba Storage Device (Thailand) Co., Ltd. (TSDT), Toshiba’s wholly-owned HDD manufacturing subsidiary located in Thailand.

Higher pricing can be expected with the relocation of HDD production following the flood, increased component costs from manufacturers impacted by the disaster, and lofty costs in general associated with the continuing development of high-technology drives.

One other factor could impact market values for the rest of the year. If the new, super-thin Ultrabooks promoted by Intel Corp. take off — and there is every indication they will — HDD prices could remain elevated throughout 2012, IHS believes.

Read More in Seagate Regains Lead in HDD Market, which can be accessed at http://www.isuppli.com/Memory-and-Storage/Pages/Seagate-Regains-Lead-in-HDD-Market.aspx?PRX

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