Hard Drive Shortages Knock $1B USD Off Intel's Bottom Line
December 13, 2011 10:45 AM
comment(s) - last by
Intel will likely receive boost in opposite direction once shortage ceases and OEMs rebuild their inventories
Globally, personal computer sales and market demand continues to rise, posting their
fourth consecutive quarter of growth
. You'd think Intel Corp. (
), the world's largest maker of personal computer central processing units, would be celebrating. Instead its financial staff are reporting some unpleasant news.
yesterday that it was dropping its outlook for fourth-quarter revenue from $14.7B±$500M USD to $13.7B±$300M. GAAP and non-GAAP gross margins also dropped half a percentage point. The cuts were due to shrinking microprocessor sales.
It turns out that the
recent flooding which ravaged Vietnam
, producers of one quarter of the world's hard drives, is still sending shockwaves through the personal computing market. Hard drive shortages have hit the OEMs hard. As they can't build computers without hard drives, they've turned to pushing much of their backup inventories onto the market.
Meanwhile, the OEMs have cut their CPU orders from Intel to lower levels. Sales won't be restored until the hard drive supply picks up again and the OEMs begin to rebuild their inventories.
The good news is that Intel could enjoy a very strong H1 2012, the exepcted timeframe where the hard drive market will return to normalcy. OEMs will be trying to build up their stock, while meeting the growing demand at the same time, and that adds up to a lot of component purchases.
In that sense, this revenue drop looks be more of a deferment that a true loss of business. That said, it is still a painful one for Intel's investors. The company's stock fell 1 a quarter percent following the news, which aired lated yesterday.
This article is over a month old, voting and posting comments is disabled
12/13/2011 3:53:01 PM
Only in the long term. There are only so many fabs making NAND flash right now, and the SSD market is still fairly niche compared HDDs. There's only so much flash out there and fabs are expensive and time consuming to build, so it's not like they could just transition people over to SSDs. We're stuck with hard drives for awhile
According to Gartner, in 2010 the NAND industry produced just over 11 exabytes of flash, of which ~10 exabytes went to consumer devices like smartphones, tablets and SD cards. Only 0.86 exabytes was used in SSDs. They predicted production rising to 21 exabytes in 2011, with 91% of that going consumer devices.
Total laptop storage for 2011 is expected to be 91 exabytes with an average capacity of 350GB, so even if the 1/10th of just the laptops out there started shipping with 120GB SSDs instead of mechanical drives, you'd need an extra 3.2 exabytes of NAND production. That doesn't even factor in desktops. There just isn't the extra capacity to move a decent percentage of computers over to SSDs, even with an almost doubling of capacity from 2010 to 2011. According to the numbers I read, the capital cost to build a fab to produce 3.75 exabytes is about $10 billion, so it's not like they can be brought online quickly.
"Well, there may be a reason why they call them 'Mac' trucks! Windows machines will not be trucks." -- Microsoft CEO Steve Ballmer
Thailand Floods Cause Storage Shortages
October 24, 2011, 7:30 AM
Analysts: Apple Now Has More Than 10 Percent of the U.S. PC Market
July 14, 2011, 1:52 PM
ZOTAC Announces Diminutive ZBOX PI320 pico
August 27, 2014, 9:00 AM
Quick Note: QNAP Announces $129 QGenie 7-in-1 NAS for Mobile Users
July 14, 2014, 9:32 AM
Apple Launches 21.5” iMac with 1.4GHz Core i5 Processor Priced at $1,099
June 18, 2014, 8:07 AM
Lowe's "Holoroom" Brings Holodeck, Home Improvement Dreams Closer to Reality
June 13, 2014, 9:06 AM
Intel to Broaden Market for Fanless Tablets, Ultrabooks with 14nm Intel Core M
June 3, 2014, 10:42 AM
ZOTAC Announces Four New Silent ZBOX Mini-PCs
June 2, 2014, 9:21 AM
Most Popular Articles
HTC Preps Nexus 9 With Nvidia K1 64-Bit "Denver" SoC, Android L Onboard
September 10, 2014, 10:21 PM
Apple iPhone 6, iPhone 6 Plus Reviews Roll In
September 16, 2014, 9:13 PM
Big Media: If You Want Privacy, You're Probably a Pirate
September 18, 2014, 2:57 PM
Apple Cripples NFC in iPhone 6, 6+ With Developer Ban
September 17, 2014, 1:00 PM
"Decepticon" Driver Triumphs Over Cops in Massachusetts Court
September 5, 2014, 12:07 PM
Latest Blog Posts
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
Space Terrorism is a Looming Threat For the United States
Apr 23, 2014, 7:47 PM
Facebook Aims to Provide Internet to "Every Person in the World" with Drones, Satellites
Apr 1, 2014, 10:20 AM
Retail Mobile Sites Experience Outages in Light of Simplexity's Bankruptcy
Mar 14, 2014, 8:48 AM
Tesla vs. BMW: Who Has the Safer EV?
Feb 1, 2014, 2:56 PM
More Blog Posts
Copyright 2014 DailyTech LLC. -
Terms, Conditions & Privacy Information