November 11, 2009

Converge reports significant volume requests for 3.5" SATA HDDs

Converge Storage Update.

3.5" Drives.
We are seeing significant volume requests for 3.5" SATA HDDs in the 320GB through 1TB range. This increase is indicative of widespread shortages across all manufacturers. Box builders are turning to the open market with the largest volume demands seen in CY09. Meanwhile, the requests are less part number specific and more specifications driven in an attempt to secure the volumes needed to maintain production levels. As anticipated in October’s Market Insights, the result is a relative stabilization of contract pricing with an uptick in spot market prices. Again, this trend is expected to continue through Q409 and likely into Q110.

2.5" Drives.
While demand remains steady in the 2.5" market, we are not seeing the same shortage issues as in the 3.5" market. Builders are able to secure the supply needed to maintain production and are turning to the open market for cost savings opportunities and service support for EOL drives. However, we are not seeing the available inventory to support the price point variance requests, suggesting a leveling in the market. As we approach the end of what is traditionally the most robust manufacturing period of the year, it is unclear which way the market will shift. As previously reported, most of the activity is centered on the 160GB–500GB SATA 5400 RPM HDDs.

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