Seagate Technology has reportedly notified its customers abouts its plans to raise prices on new hard drive orders and for demands that exceed prior agreements, echoing a similar move by Western Digital, which increased its prices earlier this month. These changes come in response to a surge in demand for high-capacity HDDs and constraints in supply due to decreased production capabilities of both Seagate and Western Digital, reports TrendForce.
According to industry insights reported by TechNews, the sector anticipates that the scarcity of high-capacity HDD products will persist throughout the current quarter and possibly extend over the entire year. It is forecasted that HDD prices will rise by 5% to 10% in Q2 2024 alone and could increase further as a reault of the ongoing challenges faced by the storage industry.
The primary driver behind Seagate's decision is increased demand for high-capacity HDDs, which are used to train AI models. This demand spike, coupled with a reduction in production output from hard drive makers, has created a significant supply-demand imbalance. As a result, Seagate has decided to adjust their pricing strategy to manage the situation. Further exacerbating the issue are global inflationary pressures which continue to inflate costs across the board, which also contributed to the company's decision to increase prices, Seagate said in a message to clients published by TrendForce.
Seagate emphasized that its reduced production capacity has been a major challenge, hindering the company's ability to fulfill customer demands fully and promptly.
"As a result, we will be implementing price increases effective immediately on new orders and for demand that is over and above previously committed volumes," the alleged memo from Seagate reads. "Supply constraints are expected to continue and as such we anticipate that prices will continue to increase in the coming quarters."
Earlier this month Western Digital also informed its customers about price hikes for its HDD and SSD products. This notification was based on similar issues — higher than anticipated demand across the whole product range and additional supply chain challenges affecting the electronics sector. Western Digital's announcement made it clear that these disruptions are likely to continue, prompting further price adjustments.
Sources: TrendForce, TrendForce, TechNews
