disk drive sales growth slowing. I stole this from the APM thread.
Message 3667865
To: WTMHouston (10285 )
From: marc chatman
Tuesday, Mar 10 1998 10:43PM EST
Reply # of 10295
For anyone still investing in disk drives, from the Singapore Business Times:
SINGAPORE
Slow 10% growth in disk drive
shipments seen
US research firm advises drive makers to cut build plans
drastically by 15-20%
By Jennifer Lien
ROWTH in hard disk drive shipments is likely to slow to 10
per cent this year -- easily the industry's weakest performance
in years, an industry research firm said on Monday.
Silicon Valley-based TrendFocus Inc's latest forecast, made after last
week's profit warnings by Intel Corp and Compaq Computer,
compares with its earlier 1998 forecast of about 13 per cent growth in
disk drive unit shipments. Other industry researchers have predicted
between 18 and 20 per cent unit growth. Last year, some 130 million
disk drives were shipped, a 23 per cent jump from 1996.
A 10 per cent rise in unit shipments would equal about 13 or 14 million
more units shipped in 1998, and half of this "should come from
adjusting inventory to normal levels", the firm said.
But TrendFocus estimates that existing disk drive manufacturing
capacity exceeds current demand by between 35 and 50 per cent,
especially at top three makers Seagate, Quantum and Western Digital.
Production plans also continue to be some 25 million units, or 18 per
cent, more than expected 1998 demand.
While the top three are struggling with overcapacity, other disk drive
companies such as Maxtor, Fujitsu and IBM have been gaining market
share. These upcoming players continue to boost production plans, thus
adding to the capacity glut.
Worsening the situation are Intel and Compaq's Q1 profit warnings last
week, which indicate slower-than-expected Q1 PC sales, damaging
prospects for a first-half disk drive industry recovery.
The firm estimates that distribution channel inventories of disk drives,
including disk drives within finished PCs, at over 10 weeks for desktop
drives, and "over one full quarter" for server drives.
With slower growth in storage demand, the use of fewer components
in each disk drive, and the Asian economic crisis sapping PC buying
power, the industry is "mired in arguably the worst market adjustment
in more than 10 years", said TrendFocus.
The firm advises disk drive makers to dramatically cut build plans by
15 to 20 per cent. And it reckons that at least five disk drive makers
could "make profound changes in their respective cost structures by
downsizing, closing factories, streamlining operations, and slowing
incremental investment". |
