Hard Disk shortage. Yeah, right!

Haven’t hard disk drives suddenly become expensive? It’s a world-wide shortage caused by flooding in Thailand, apparently. Yeah yeah, we’ve been here before: Fire in the jungle somewhere causing a loss of chip production, and so on. The problem is that when you looked for a fire in a fab, there never was one – and there aren’t that many fabs around.

Actually, it is true that floods in Thailand have affected some drive production. There are blogs all around the place predicting doom, gloom and providing figures as to what the shortfall might be. People are wringing their hands and predicting even worse supply problems and price rises after Christmas.

I say phooey.

I’m sceptical that the lost production is as high as claimed, and given the rising price of drives, all the HD makers will be ramping up at other facilities in double-quick time. This will lead to over-production pretty soon. The short-term supply shortfall shouldn’t even be seen as there are always lots of drive sitting in warehouses.

But you’re wrong, I hear the cries. If you were right, why is everything out of stock in spite of inflated prices. Panic buying might have an effect on that. If the channel thinks prices are going to rise, they will. It’s a self-fulfilling prophecy if ever there was one. But it has a use-by date. Sooner or later everyone will be sitting on their expensive stock pile and wondering why supplies haven’t run out – and when they do the over-supply will come through the system.

The suppliers aren’t going to quash the rumours, of course. Why should they when everyone further down the chain is paying double for everything in their warehouse.

How do I know all this? I’ve seen it all before.

Warning: Just because this happened in the past, doesn’t mean it will happen in the future. If you lose money based on the above prediction, it’s entirely down to you.

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