Collapse of Resonac: HDD Component Manufacturer Shuts Down and Lays Off 600 Employees Amid Hard Drive Crisis

Hard drives have been the most popular storage device for many decades. The first hard drive was invented by IBM in 1956, but it was not until much later that they were used as primary storage in PCs. After dominating for many years, hard disk drives (HDDs) took a secondary role when solid-state drives (SSDs) arrived. Since then, many hard drive companies have faced difficulties, and in fact, Resonac, an HDD component manufacturer, has collapsed, closing its factory and resulting in the loss of 600 jobs.

Over time, the importance and sales of hard drives have decreased due to the arrival of affordable SSDs. Initially, SSDs were quite expensive, but with time and massive user demand, their prices have dropped to the point of costing nearly the same as HDDs. Today, we can buy 1TB of SSD and HDD storage for almost the same price (around 50 euros), and even lower for SATA 3 SSDs.

Resonac, a Taiwanese HDD component supplier, is closing its factory and laying off 600 employees.

In this challenging time for hard drives, it’s normal to see companies making cuts and sacrifices to survive against the dominance of SSDs. A report has emerged about a major HDD component supplier called Resonac, located in Taiwan, which is on the brink of collapse and has had to cut staff. As a result, Resonac announces the complete closure of its factory in Hsinchu, terminating nearly 600 employees.

This decision has impacted many other companies in the sector, as it was reported that in September, 40 companies based in the Hsinchu Science Park laid off 165 employees. In October, 48 companies and 496 layoffs were reported in total, with most due to Resonac’s collapse.

HDD sales fell by 35% in early 2023 compared to the previous year.

Despite the massive layoffs, companies in the Hsinchu Science Park have 3,602 more employees this year than last year, an annual increase of 2%. There are a total of 572 companies, seven more than during 2022, so the negative impact has been felt mainly in the hard drive sector. When SSDs entered the consumer market about 10 years ago, they were very expensive, and even buying a 128GB or 256GB SSD cost considerably more than a 1TB hard drive.

However, the situation has changed dramatically in recent years, causing SSD prices to drop significantly. Adding to this is the M.2 NVMe format with much higher speeds than SATA 3 for a similar price, another factor contributing to their popularity. As a result, companies like Seagate and Western Digital reported a 43% decline in hard drive shipments earlier this year compared to last year. Sales decreased by 35% compared to the first quarter of 2022, and there was a massive 54.3% drop in the enterprise and cloud storage market.

Resonac’s collapse results in the closing of the HDD component manufacturer and the layoff of 600 employees amid the hard drive crisis.