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Rare Earth Becomes Rarer – Hard Drive Prices May Rise

“Multiple manufacturers in the IT industry have been keeping a wary eye on China’s decision to cut back on rare earth exports and the impact it may have on component prices.

An article from DigiTimes suggests we’ll see that decision hit the hard drive industry this year, with HDD prices trending upwards an estimated 5-10 percent depending on capacity.

Although rare earth magnets are only a small part of a hard drive’s total cost, China cut exports last year by 40 percent, which drove pricing for these particular components up an estimated 20-30x.

At that point, a rare earth component that originally cost 25 cents is suddenly $5—and given how cheap hard drives have become, that translates into a 5-10 percent increase to the retail cost.

With the HDD market divided between Western Digital, Seagate, and Toshiba, there’s no room in rock-bottom margins to absorb the cost jump, so the major manufacturers will have no choice but to pass it on.”

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