August 29, 2012 - Nine months ago severe flooding devastated Thailand and much of its industry, and among the hardest hit were various suppliers in the electronics food chain from IC makers to assembly/test firms to hard-disk drive manufacturers. By spring 2012 the HDD industry was in rapid recovery mode, but with some upheaval as Seagate overtook Western Digital in units shipped.
Now, though, the rivalry is renewed and the tables have flipped again, with Western Digital retaking the HDD unit shipments lead in 2Q12, thanks to its flood recovery efforts and a boost from recently acquired Hitachi GST, according to IHS iSuppli. Both companies set records in revenues during the period, and their gross margins remained high (31% for WD, 33% for Seagate) -- in Seagate's case margins have improved significantly in recent quarters, even as it's soaked up extra costs to rework product-specific problems such as noise issues and contamination problems. Overall HDD revenues totaled $10.3 billion in 2Q12, a 7% increase from 1Q12, with an 8% increase in shipments.
Seagate has been the HDD revenue leader for much of the past decade. Western is back on top, though, and IHS iSuppli sees it remaining there in 3Q12 -- but then all bets will be off. "The fourth quarter will be a tossup, and the industry champion by then will depend on how well each company executes for the remainder of the year, coupled with the market performance of enterprise and consumer PC solutions on which hard disk drives depend," explains the analyst firm.
Solid-state drives are battling to take some marketshare away from HDDs by offering performance advantages (speed and power consumption), but their higher costs remain a hurdle. In the near-term, more likely for consumers and enterprises is a hybrid HDD-SSD combination that will boost performance to SSD levels while maintaining lower costs and high capacities.
Forecast of worldwide HDD shipments, in millions of units. (Source: IHS iSuppli)