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Sunday, June 08, 2014
HDD Market Seen To Post Modest Growth in 2014

Despite the worrying political situation in Thailand, the country where most had disk drives (HDDs) are built, indications from both HDD and automotive supply chains are that it is "business as usual, while 2H '14 HDD build plans semms to be aggressive.

Discussions centering on 5.25" form factor HDDs for cloud/hyperscale/ enterprise continue through the supply chain, but activity is primarily between HDD suppliers and their customers, accoding to the latest TRENDFOCUS report. Making larger HDDs is not a trivial pursuit, and the supply chain is not expected to invest in a new form factor. HDD companies interested in making a 5.25" drive may have to truly 'partner' with suppliers to help offset tooling/engineering costs and to mitigate risk. Additionally, making larger HDDs might open the possibility of selling "cold storage racks" that are purpose-built for cold storage applications.

2H HDD builds looking a bit top-heavy, but reports from the HDD supply chain indicate that the combined HDD production schedule for the second half of 2014 is outstripping perceived demand. While Trendfocus has forecast a mild uplift in second-half HDD shipments, production plans are about 20 million units beyond the forecasted demand. As it typically happens, builds can be inflated to extract price concessions from suppliers.

Trendfocus sees better than expected demand for HDDs for Sony's Playstation for both in CQ2 and CQ3 before fading seasonally in CQ4. Notebooks builds have also been stronger, year on year.

The firm expects that CQ3 - being 14 week quarter for Seagate and WDC - could be the high point in HDD shipments.

In summary, positive indicators today may result in incremental shipments of 5 million to 7 million HDDs for the year, which means the HDD market would post a Y/Y growth, albeit a modest one.

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