For Seagate CEO Dave Mosley, COVID-19’s disruptive impact on the computer storage industry reminds him of major floods in Southeast Asia in 2011.
“We lost a bunch of factories due to a really unfortunate flood,” Mosley said, referring to a deluge in Thailand that ended up causing a temporary shortage of hard drives worldwide.
“The same thing happened in the very early days of COVID,” Mosley added. The major difference, however, was that the flooding was relatively brief, whereas COVID-19’s effects have been prolonged.
“Oh, this COVID thing is going on longer than I thought,” he remembered his team telling themselves as the pandemic worsened during the spring of 2020.
Seagate manufactures hard drives in factories in the U.S., Northern Ireland, Singapore, Thailand, Malaysia, and China, he said. As a result, the company has had to closely monitor COVID-19 outbreaks in those areas.
“If you shut down a factory, obviously you’re not making money, and your people don’t want to come back to work,” Mosley said. “You’ve got to make sure it all stays synchronous, and I think we’ve done a pretty good job of that over the last year, but COVID continues to throw curveballs at you.”
Seagate has estimated that over 85% of its employees are vaccinated. It only instituted vaccine mandates as of last week.
Like many personal-computer makers including HP and Dell, Seagate has seen its PC hard-drive business shrink over the years as smartphones grew in popularity among consumers. Since 2012, Seagate’s annual sales have declined 28% to $10.681 billion in its fiscal 2021.
Mosley explained that Seagate has increasingly focused on selling hard drives to companies that operate huge cloud computing data centers. Although much of the attention in data center technology goes to computer chips like GPUs that power A.I. software, he said those chips still require access to certain kinds of data that may not be immediately available. This kind of “cold data” is often stored in the kind of hard drives that Seagate sells to data center operators, which he declined to name.
“It’s not the most important part of the data center, but it’s a pretty darn important part, and what’s interesting is that data just keeps growing,” Mosley said.
Because Seagate requires certain kinds of computer chips to build its hard drives, it has felt the brunt of the global semiconductor shortage. The biggest impact has resulted from customers delaying new data center installations owing to the shortage of computer chips necessary for these major projects, he explained.
“There’s a lot of smaller regional players or telcos [industry jargon for telecommunication companies] that can’t [launch] their data center build-outs,” Mosley said. “Anyone who was trying to do a big data center expansion over the past 18 months is witnessing these impacts.”
One unusual growth area for Seagate has been in cryptocurrencies. Seagate told investors in June that it’s seeing more demand for its hard drives because of rising interest in the lesser-known Chia cryptocurrency. Whereas popular cryptocurrencies like Bitcoin and Ethereum generally require the work of GPU chips to power the calculations that “mine” new digital coins, Chia and another cryptocurrency called Filecoin rely more on hard drives as part of the computing process to mine their respective digital coins.
Mosley acknowledged that Chia and Filecoin, sometimes referred to as “proof of space and time” cryptocurrencies, “are very dependent upon hard drives,” but added that he doesn’t “really play in that space,” implying he’s not a cryptocurrency enthusiast.
Mosley is interested, however, in the general concept of “decentralized applications,” software that functions on a network of computers scattered around the world. They are often powered by crypto-friendly technologies like blockchains. He explained that if these kinds of apps become more popular, computer scientists will need to create more advanced technologies around “decentralized storage.”
“We’re excited about it,” he said.
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