As notebook brand vendors are starting to prepare their shipments for the end-of-year holidays, hard drive makers, which had conservative production plans for the fourth quarter due to a weaker-than-expected third-quarter performance, have recently started seeing short supply of hard drives and the problem is likely to persist through the first quarter of 2011, according to sources from hard drive makers.
Due to Europe's bond crisis, the euro exchange rate to the US dollar dropped significantly in the second quarter, causing notebook brand vendors to lower the specifications of their notebooks in Europe to maintain profitability, with hard drives being a feature lowered by the vendors. As a result, demand for large storage hard drive dropped significantly in the second and the third quarters.
Since demand for smaller storage space hard drive such as 250GB and 320GB models, was stronger than that of 500GB and higher models in the second and the third quarters, while overall demand for hard drives was weak, most makers have decided to keep their fourth-quarter production volumes the same as the third quarter or slightly higher, with most of the capacity to be used for low-storage models.
However, as the DRAM price started dropping significantly, notebook brand vendors have decided to use the cost saved from the DRAM price to upgrade their hard drives. Therefore, hard drive makers have started seeing demand for high-storage hard drives such as 500GB and 600GB models, recovering since September. Demand continues to rise in October, and hard drive makers are starting to see their component supply falling short of demand, as high-storage hard drives require more components.
Since hard drive makers will need at least 2-3 months of buffer period to change their production schedule, the shortage of hard drive may continue into the first quarter of 2011.