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Sunday, April 06, 2014
137 Million HDDs Expected to Be Shipped in 1Q14

Trendfocus expects that 137 million HDDs will be shipped worldwide in 1Q14 at middle of the industry's expectation range.

The CQ1 TAM will not likely reach Trendfocus' forecast, but should end up in the 135-136 million range.

"The sluggish enterprise/nearline business environment in the quarter has now been complemented with softer pulls by PC OEMs. We now expect the quarter to end at the low end of the acceptable variance range of our own forecast," Trendfocus said in its latest Executive Brief.

HDD companies had, as of mid-March, closer to 4 weeks of inventory. This is slightly higher - but within a reasonable range - than the 2-3 weeks that have been typical in recent quarters. With partial or near-full production shutdowns in Asian HDD factories, Trendfocus expects the suppliers to push the inventory level to closer to 3 weeks by the end of March.

PC demand has been soft in CQ1 and tracking normal seasonal patterns. The Microsoft XP expiration had little overall impact in spurring new demand, as the installed XP OS base appears willing to rely on third party security software, for the time being, to catch any viruses or malware that may target yet-to-be exposed holes in the 12 year old OS.

Additionally, users were given ample warning of the end-of-support date from Microsoft, motivating many companies to being the process of replacement more than a year ago. That said, Trendfocus estimates that one-quarter of all PCs in use today will continue to run XP, so the transition away from an OS that is four generations old may be a long and slow one.

CQ2 build plan range from 135 to 138 million, reflecting the belief that typical seasonality will dampen demand. Anxiety about 2H demand is permeating throughout the supply chain, as another year of soft demand is likely to take its toll on some of the weaker companies.

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