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Seagate: Shortage of disk drives to continue through 2012

John Ribeiro | Feb. 2, 2012
Seagate Technology said Tuesday that supply of hard disk drives (HDDs) this year will continue to fall short of demand, leading large customers to look to long-term agreements to ensure supply after devastating floods in Thailand.

Seven of its top ten suppliers had their factories damaged as they were in the industrial parks 30 miles north of downtown Bangkok that were severely affected by the floods, and at one point supply of components was totally down for some product lines, Mosley said.

The low point of industry production was not in the middle to late October, as some industry observers hold, but closer to the middle of December, said Steve Luczo, Seagate's CEO.

Seagate is also seeing some changes in the industry, including in the way customers are now placing orders, Many large customers entered into long-term agreements, sometimes running into a number of years, which is new to the industry, and represents a structural change in the way the company does business, Luczo said.

The long-term agreements are expected to account for over 60 percent of Seagate's production capacity in the calendar year, according to Luczo.

The company plans to auction about 200,000 drives later this week to gauge demand, and provide customers an additional channel to buy the drives. Seagate plans to conduct such auctions periodically, Luczo said.

 

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