Manufacturers of hard drives, storage devices and RAM are raising prices

What happened, why are prices rising and who is raising them?

It’s worth answering the last question right away: the largest companies, including Seagate, Western Digital and others, are changing the prices of their products. They themselves reported this, although not in press releases, but in letters to their clients. Most recently, on April 18, Seagate announced that it was forced to change its pricing policy due to several factors, which were already mentioned above. First of all, this is an increase in demand (although recently the same companies complained about falling sales volumes), then inflation and the inability to quickly expand production.

Western Digital voiced approximately the same reasons. She also sent out a letter to corporate clients, which talked about the increase in demand for storage drives and hard drives. In addition to the reasons already voiced, she also named a new one – problems with supply chains.

Prices have been raised so far only for corporate clients, but after electronic devices with storage drives and hard drives go on sale, retail buyers will face an increase in costs. Moreover, we can expect additional price hikes in the near future, so this is not a one-time “promotion.”

According to experts, the excess of demand over supply will persist for at least several months, most likely until the end of 2024. And by the beginning of summer, prices for hard drives will rise by 5-10%.

Experts believe that the companies could simply agree to increase prices, since they had big problems with the production and sales of products. Demand for it was constantly falling, about which many articles and news were published, and now, in just a few months, companies are announcing rapid growth in sales. Perhaps corporations have now decided to make up for lost time by increasing prices.

It is worth noting that for the financial year 2023, Seagate's revenue fell by $4.277 billion when compared with 2022. The total figure for last year was $7.384 billion. At the same time, the company received a loss of $528 million, and only a couple of years ago, in 2022, it announced a significant profit of $1.649 billion. But Western Digital suffered even greater losses – they amounted to $1.73 billion at the end of the year.

Increased demand is probably true

The fact is that the field of artificial intelligence is now actively developing. Accordingly, the demand for high-performance chips, as well as data storage systems, is growing. In general, any GPU server has both RAM and HDD with SSD installed. The more such equipment is required, the higher the demand of manufacturers for components.

Accordingly, there is now high demand and relatively low competition. As mentioned above, there are only a few companies of approximately equal size operating on the market. And if so, then they can raise prices as high as they like – they will still buy the products.

Not only HDD and SSD, but also RAM

Yes, the problem with prices now is clearly complex. Thus, most DRAM chip manufacturers have announced that they will also raise prices. Some of them justify the change in pricing policy by problems associated with the recent disaster in Taiwan.

It is worth recalling that just a couple of weeks ago there was an earthquake with a magnitude of 7.4. Accordingly, various infrastructure facilities, buildings and structures belonging to technology corporations were damaged. Several companies were affected at once, including one of the most famous – Micron. It is a significant player in the global DRAM manufacturing industry. The company had to suspend the operation of many facilities for a long period. The hardest hit were those related to the production of DRAM for server systems.

True, it was reported that by April 8, the vast majority of manufacturers had restored their previous production volumes. Accordingly, there should not be any special consequences of the earthquake. Of course, there is no guarantee that market players will not agree on a price increase, as has already happened and will happen.

But even without the earthquake, prices rose. So, in recent months, Micron, as well as Samsung, have raised prices by 20%. And this is not the limit, since by the end of the second quarter of 2024 both corporations are going to increase the cost of their products even more. Perhaps prices will rise the most for DDR3, but this will not happen because of an earthquake, but because of a shortage of the product itself. The fact is that most companies began to produce more DDR4 and DDR5 memory, reducing the production of DDR3. But since hundreds of millions of users still have laptops from previous years with DDR3, the demand for memory is quite high. But production has decreased. Accordingly, the price gradually increases.

Well, for now we can only wait and hope that the cost of the components mentioned in the article will not skyrocket. Otherwise, both large manufacturers and ordinary users will have problems.