Taipei, Friday, March 6, 2015 14:00 (GMT+8)
mostly cloudy
Taipei
17°C
Digitimes Insight: Japan earthquake to affect HDD industry
Hana Hu, DIGITIMES Research, Taipei [Monday 21 March 2011]

The global hard disk drive (HDD) industry, already facing challenges from solid state drives (SSDs), cloud computing and limitation of vertical read-write technologies, is expected to face even more challenges resulting from the March 11 earthquake in northeastern Japan, which has severely damaged the plants of local HDD component makers including hard disk maker Showa Denko, and HDD-use substrate makers Furukawa Denko and Kobe Steel. These makers have all reported damage to facilities as well as injuries of employees and have shut down their operations pending further evaluation.

Showa Denko currently has about 25% share of the global hard disk market and in addition to its plants in Japan, the company also has plants in Taiwan and Singapore that can fill in for the suspended capacity at the damaged plants in Japan. Since Showa Denko's clients Western Digital and Seagate also have a portion of their hard disk supplies from in-house production, Digitimes Research believes that the hard disk market will not see any immediate shortages.

Furukawa Denko and Kobe Steel produce HDD-use substrates using aluminum mainly for desktop PCs. The two makers together dominate the entire HDD-use substrate market. Since their capacities are all located in the disaster zones, if the two makers continue to shut down their operations, the HDD industry may see substrate shortages.

With Western Digital set to acquire Hitachi's HDD subsidiary Hitachi Global Storage Technology, only four major makers will remain in the HDD industry - Western Digital, Seagate, Toshiba and Samsung Electronics. Western Digital and Seagate both produce their hard drives in house, while Toshiba's and Samsung's shipments are partly from in-house production and partly from outsourcing partners. The HDD makers have different lineups of component suppliers, but as the number of HDD component suppliers is limited, any impact on the upstream component sector should have a direct effect on the downstream HDD makers.

An HDD is constructed with key components such as magnetic read/write heads, disks and electric motors. Japan-based TDK, Showa Denko and Fuji Electric are all suppliers of magnetic read/write heads and disks, while Western Digital and Seagate both manufacture part of their read/write heads and disks, and source from Japan makers.

TDK currently owns about 30% of the global magnetic read/write head market and since its plants in Japan are away from the disaster zones, the company has not seen much impact from the earthquake. However, Showa Denko's two disk manufacturing plants in disaster-stricken areas have shut down.

Showa Denko currently can produce about 22 million disks each month, accounting for 25% of the global market. In addition to its suspended plants in Chiba and Yamagata in Japan, the company also has production lines in Taiwan and Singapore. The company started expanding capacity at its Singapore facilities last year and the new capacity will be able to cover the shortfall at its Japan plants.

Supply of HDD-use substrates and electric motors is dominated by Japan-based makers. Hoya is a major supplier of glass substrates, while Kobe Steel is a main player for aluminum substrates. Nihon Densan is a top supplier of motors. Most of the substrate and motor makers including Hoya, Nihon Densan and Konica Minolta do not have plants in the disaster zones, and they only have seen limited impact from the earthquake. But both Furukawa Denko and Kobe Steel have plants in the disaster zones.

There are two types of materials used for HDD-use substrates - aluminum and glass. The substrates are mainly supplied to players such as Japan-based Showa Denko and Toyokoban as well as Seagate and Western Digital. Due to its low price, the aluminum substrate has been broadly used in the PC market, especially the desktop segment, while glass substrate, which features strong shock-resistance, is gradually penetrating into the notebook market. Since aluminum substrate is still the mainstream materials for hard drives, the substrate industry is almost dominated by Kobe Steel and Furukawa Denko.

Kobe Steel's and Furukawa Denko's HDD substrate plants are both located in Tochigi, Japan with Kobe Steel capable of producing 30 million and Furukawa Denko 20 million units each month. Since both companies' capacities are all located in the disaster zones, their production issues should significantly impact the HDD industry, especially the desktop segment.

HDD makers have some of the magnetic read/write head and hard disk supply coming from their in-house production, but they still have to rely heavily on substrates and electric motors from Japan suppliers.

Both Seagate and Western Digital are capable of producing hard drives and can make adjustments when needed, and the pair should not see much trouble from possible hard drive shortages. As for Toshiba and Samsung, the two can also receive support from Showa Denko's overseas plants to resolve their shortage issues.

Since HDD substrates are mainly supplied by Kobe Steel and Furukawa Denko, it means that even if the two makers can repair their damaged equipment quickly, their production would still be affected by Japan's rolling power cuts.

Hoya and Nihon Densan were not impacted by the earthquake, but they will still feel the impact of the power brownout policy. They might consider moving their production overseas to lower their revenue losses.

HDD makers' component supply status

HDD maker

HDD

Magnetic read/write head

Hard disk

HDD substrate

Electric motor

Seagate

All in-house

Partly in-house, partly outside supply

Party in-house, partly outside supply

All outside supply

All outside supply

WD

All in-house

Partly in-house, partly outside supply

Partly in-house, partly outside supply

All outside supply

All outside supply

Toshiba

Partly in-house, partly outside supply

All outside supply

All outside supply

All outside supply

All outside supply

Samsung

Partly in-house, partly outside supply

All outside supply

All outside supply

All outside supply

Partly in-house, partly outside supply

Source: Digitimes Research, compiled by Digitimes, March 2011

Image

Source: Digitimes Research, compiled by Digitimes, March 2011

Image

Source: Digitimes Research, compiled by Digitimes, March 2011

Source: Digitimes Research, compiled by Digitimes, March 2011

Image

Source: Digitimes Research, compiled by Digitimes, March 2011

Image

Source: Digitimes Research, compiled by Digitimes, March 2011

Image

Source: Digitimes Research, compiled by Digitimes, March 2011

Topics: Page 2

Realtime news
  • Nearly half of light bulb shipments to residental segment to be LED by 2022, says IHS

    LED | 1h 55min ago

  • LCD TV panel pricing expected to ease in 2Q15

    Displays | 2h 11min ago

  • PC shipments in 1Q15 may fall over 20%, say Taiwan makers

    Before Going to Press | Mar 5, 21:58

  • KYEC expects 2015 sales to rise

    Before Going to Press | Mar 5, 21:56

  • SPIL February sales rise 16.2%

    Before Going to Press | Mar 5, 21:55

  • Global Unichip utilizes Cadence analog IP to implement WiGig-enabled SoC on 28nm process

    Before Going to Press | Mar 5, 21:54

  • 4G handset penetration in China to reach 40% in 2015

    Before Going to Press | Mar 5, 21:53

  • Inspection tool maker HMI looks to 25-35% revenue growth in 2015

    Before Going to Press | Mar 5, 21:52

  • Unity Opto Technology sees sequential drop in February revenues

    Before Going to Press | Mar 5, 21:51

  • Getac February revenues down sequentially

    Before Going to Press | Mar 5, 21:50

  • GET to issue up to 150 million new shares for private placement

    Before Going to Press | Mar 5, 21:50

Pause
 | 
View more

2015 China IC design market forecast

RESEARCH EXTRAS | Jan 23, 10:50

Global economic growth is forecast to reach 3.8% in 2015, up from 3.3% in 2014. From the perspective of the electronics industry though, PC shipments will continue to decline, smartphone shipment growth will drop, and tablet shipments may decline. Despite the...

2015 global AP market forecast and vendor analysis

RESEARCH EXTRAS | Jan 23, 10:46

Digitimes Research estimates that total 2014 AP shipments will reach 1.52 billion units worldwide, up 19.6% from 2013, and in 2015 the global market will see shipments of 1.65 billion units, growing 8.5% on year. The slowdown is mainly due to a shrinking tablet...

Taiwan large-size LCD panels – 4Q 2014

TAIWAN FPD | Feb 17, 11:23

Taiwan-based makers saw their large-size TFT LCD panel shipments increase on year in fourth-quarter 2014, driven largely by demand for TV applications. But they are facing growing competition from China-based and Korea-based makers who are ramping up new production...

Taiwan LCD TVs – 4Q 2014

TAIWAN FPD | Feb 17, 11:07

Taiwan's LCD TV makers saw significant increases in shipments in the fourth quarter of 2014 thanks to strong seasonal demand, as well as Foxconn's shipments to Mexico to fulfill government procurement orders.

Taiwan small- to mid-size LCD panels – 4Q 2014

TAIWAN FPD | Feb 16, 15:11

Major Taiwan-based suppliers of small- to medium-size LCD panels changed their production strategies in fourth-quarter 2014 as the industry entered the slow season amid sluggish demand for smartphone applications and rising competition from China-based rivals...

2015 global notebook demand forecast
DIGITIMES Marketing Services
DIGITIMES Translation Services
  • Wireless broadband developments in Southeast Asia markets

    As of 2013, the 10 ASEAN nations had a total of over 700 million mobile subscriptions, with the CAGR from 2003-2013 reaching 24%. This Digitimes Research Special Report analyzes the various mobile broadband markets in ASEAN and looks at the respective trends in 4G LTE development for those markets.

  • Greater China touch panel shipment forecast through 2015

    This Special Report provides forecasts through 2015 for Greater China touch panel shipments with breakdowns based on technology (glass, film, resistive), application (smartphone, NB and tablet) and by firm.

  • 2014 global tablet demand forecast

    This report analyzes the main players, their strategies and shipments forecasts for 2014, as well as other factors contributing to either growth or decline in various segments within the tablet market, with a particular focus on Apple, Google, Samsung, and Microsoft, along with whitebox vendors.