On March 12, Bloomberg reported that there were concerns that the war might disrupt the supply of key materials such as helium.Executives at hard drive giant Seagate say conflicts in the Middle East will not seriously hamper technology supply chains in the short term.Some investors worry that a protracted war could exacerbate already tight supplies of memory chips and storage devices.
Seagate Chief Commercial Officer Zheng Wancheng
The concerns have affected confidence in Seagate and rival Western Digital. The two companies supply most of the hard drives used in data centers and PCs for long-term storage. Both companies have warned that all production capacity for their hard drive products through 2026 has been sold out.
"Right now, the resilience of our supply chain allows us to buffer against any short-term impact," Ban Seng Teh, Seagate's chief commercial officer, told Bloomberg Television on Thursday, adding that Seagate was exploring "several other options" to safeguard its supply.
Bloomberg Economics estimates that the closure of Qatar’s Ras Laffan LNG plant will take about a third of global helium production offline. Bloomberg Intelligence analyst Michael Deng said this could have an impact on chipmakers because helium is an essential material in the chip production chain and there is no ready substitute.
"If the supply disruption lasts for more than a few weeks, the helium shortage may force chip manufacturers to allocate more production capacity to AI memory, thereby exacerbating the already serious memory shortage problem." Michael Deng said. The production of large-capacity hard drives also requires helium.
Seagate and Western Digital are responding to a surge in demand for hard drives as the world races to build data centers to strengthen AI competitiveness. AI is seen as the key to determining winners and losers in business and geopolitics.
Zheng Wancheng said that companies must invest in AI.He added that Seagate is not increasing unit production, but is focusing on increasing storage density per drive. This echoes similar statements from Western Digital executives. However, he said prices will stabilize in the coming years.