Gloomy future for HDD sales for Thailand

After more than two years of riding high on growing demand for cloud data storage, Thailand’s hard disk drive exporters are bracing for a fall from grace.

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Data due to be released on Monday will likely show Thai exports of hard disk drives (HDDs) in March extended a run of double-digit growth after jumping 45 per cent in the first two months of 2016 to $US1.1 billion ($A1.43 billion).

The rise has been a rare bright spot in Thai tech manufacturing, beset by cheaper competition from China.

But as the global boom in mobile devices cranks up, electronics makers are diverting demand away from old-school disk drives for servers and personal computers, seeking flash memory chip supplies instead. As well as fearing lower prices for their ageing tech, Thai shippers now worry more advanced suppliers in countries like Malaysia will snap up business.

“It’s worrying that others are shifting to more advanced technology and letting us make HDDs,” said Nopporn Thepsithar, chairman of the Thai National Shippers’ Council.

“PCs will be gone in the future, so hard drives will be a short-term thing. With disruptive technologies, I see no place for HDDs.”

The world’s second-largest maker of HDDs after China, Thailand’s exports of the hardware have so far recovered well from paralysis that accompanied political turmoil in 2014. But the $US26 billion global HDD industry is set to shrink three per cent this year, according to research firm Gartner, as demand for solid state drives (SSDs) using high-tech flash memory chips grows.

There’s no suggestion of any sudden slowdown among Thai HDD makers, but gloomy longer-term forecasts are a concern for a country where exports are worth about two-thirds of the country’s economic output, and electronics were the biggest contributor last year. While HDD exports motored on in January and February, electronics exports overall dropped 5 per cent, with computer parts down 12.5 per cent.

Rival electronics producer Malaysia has an edge over Thailand because SSD suppliers have based their manufacturing operations there, said Visnu Limwibul, chairman of the Thai Electrical, Electronics, Telecommunication and Allied Industries Club.