The decision is a part of the world’s largest hard disk drive or HDD maker’s cost-cutting efforts, as its profit is falling, due to decreasing market demand.
During the past few years, Seagate’s profit has been dropping on slowdowns in shipments of its HDDs.
The company’s revenue has fallen to US$2.925 billion in the first quarter 2016 from US$3.785 billion in the same quarter in 2015.
Decreasing HDD sales have resulted from global market trend where market gravity is rapidly shifting from traditional HDDs to solid-state drive or SSDs.
SSDs are a concentration of NAND flash memory chip and a controller on a tiny circuit board.
The replacement of HDDs to SSDs has more to do with performances than prices.
In the past, even if SSD were faster in writing and reading data, HDD undercut them on prices, capacity, and availability.
The advantage is now rapidly fading, as 3D NAND flash memory chip-based SSDs are getting more reliable, more endurable, speedier, and most importantly cheaper in the unit cost per storage space.
The price has continued to narrow to a point where the price difference does not significantly matter. If prices of SDDs keep going down, they will likely match HDDs in prices as early as in 2018.
Seagate said in its PR statements, “The shutdown decision is to reduce our global manufacturing footprint and better align the business with current and expected demand trends”
Yet it was forecasted that Seagate will not fully withdraw from the HDD business as there still is enough demand in the growing global data storage market.
Seagate still has its Wuxi HDD facility operating in China.