[News] AI Boosts Demand for High-Capacity HDDs, as Seagate Expected to Follow with Price Increases

2024-04-22 Semiconductors editor

Following the announcement of a price increase by the U.S. memory giant Western Digital Corporation (WDC), hard drive manufacturer Seagate Technology has also announced that it will raise prices in response. Seagate stated that they will immediately increase prices for new orders and demand exceeding previous commitments.

Due to the demand for high-capacity HDD products driven by AI, coupled with reduced production by hard drive manufacturers, the overall HDD supply is unable to meet demand, leading to soaring prices. According to a formal letter from Seagate to its customers, demand recovery continues across several segments of their business, and the reduced manufacturing capacity is limiting their ability to meet all of their customers’ demand and is resulting in longer lead times. Additionally, ongoing global inflationary pressures continue to impact costs.

As a result, Seagate Technology will implement price increases for new orders and demand exceeding previous commitments, and they anticipate ongoing supply constraints, indicating that prices will continue to rise in the coming quarters.

As per industry sources cited by TechNews, there is an expectation of ongoing supply shortages for high-capacity HDD products this quarter and potentially throughout the entire year. The same source also indicates that, HDD prices are expected to continue rising in the second quarter of this year, with increases estimated at 5% to 10%.

Previously, on April 8th, WDC notified customers of ongoing price increases for NAND Flash and hard drive products, confirming the supply shortage of HDDs.

In the notification, it was indicated that they are seeing higher than expected demand across their entire flash and hard drive portfolio resulting in supply constraints. In addition, supply chain challenges for the overall electronics industry are further impacting supply availability. Given these circumstances, they will continue to implement price increases on flash and hard drive products this quarter, with some changes taking effect immediately.

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(Photo credit: Seagate)

Please note that this article cites information from Seagate and TechNews.