The End of HDD? Seagate Shut Down Its Suzhou Factory

Judy| 2017-01-16 News Comments( 0 )

Hard-disk maker Seagate Technology Plc has just announced its decision to shut down its Suzhou disk drive manufacturing plant in China in January 10th, 2017, and dismiss over 2000 relevant employees there. As a response to its earlier restructuring plans launched in July 2016, the latest job cuts seem to be no accident but a part of reducing its global manufacturing footprint. 

It is understood that Seagate Technology Plc is one of the three major players in global HDD market, alongside Japan’s Toshiba and Western Digital. Western Digital so far this year leads the market share at 42%, followed by Seagate at 37% and Toshiba at 21%.

However, as with the rapid growth of SSD shipments, HDD market is facing with sharp declining demand and overcapacity. According to the latest statistics released, the number of HDD shipment has been declining for several years since the peak of 653.6 million units in 2010. Though the total HDD shipments in CQ3 2016 saw a significant increase, it failed to stop the extended downturn of the worldwide HDD market.

On the contrary to that, the demand for the storage component SSD (also known as solid state drive) is growing rapidly, which seems really incredible if taking the shrinking PC market into consideration. From the below table, it’s not hard to find that the shipments of SSDs Q1 2016 were up 32% from a year earlier, from 23.190 growth to 30.777 million units.

What makes this situation happen should partly contribute to the inherent drawbacks of HDD, however. Technically, the traditional mechanical hard disk drive is prone to fragmentation of data as a result of its rotary recording surface, therefore requiring longer time in the process of reading and writing compared to the fragmentation-free solid state drive. Another drawback of HDD is the higher power consumption so as to have the metallic platter rotated and have the magnetic read head moved. Differently, SSD can access any position of the driver accurately and quickly based on flash memory chip instead of mechanical components. But what sets SSD apart from HDD are not only the excellent random access speed but also the outstanding multitasking capability, prominent reliability as well as durability.

Affordable pricing and high storage capacity once were the most competitive advantages of HDD, but they’re not so powerful any more as the development of SSD technology. The mainstream capacity of SSD has grown from 32GB to 128/256GB, the maximum capacity can even reach 10TB nowadays. Meanwhile, the price of SSD is falling all the way, making it more affordable for the generic public. As you can see in the web hosting industry, that the vast majority of hosting companies are switching to SSD storage. It is predicated that HDD will be entirely replaced by SSD in the very near future.

In the face of changes in the trend of the environment, Seagate, Western Data and other main traditional HDD manufacturers has no choice but to embrace SSD technology. In 2015, Western Data has announced to acquire SanDisk, one of the largest flash chip maker in the world, becoming the second traditional HDD manufacturer having flash resources. Seagate in 2014 also announced its acquisition of ASD and FCD assets for $450 million in cash, but the consumer SSD product line has been early shut down without saying the company lacks of flash production line. The end result is: Seagate obtains very little market share especially in the field of consumer SSD.

All these have led to Seagate’s taking layoffs and closing factories on a global scale. And it becomes even more difficult for the company at present to come back to mainstream market of data storage device because many countries like China are beginning to actively promote the domestic storage industry. Maybe the only one possible way available for Seagate alike traditional HDD manufacturers is cooperating with local storage manufacturers. 

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