USA: The Hard Disk Drive (HDD) industry underwent a resurgence in profitability in the third quarter, signaling that the storage market finally is on firmer ground, according to iSuppli Corp.

The HDD industry shipped 138 million drives in the third quarter of 2007, up 19.6 percent from 115 million drives in the second quarter, according to iSuppli Corp. Combined third-quarter revenue for all HDD suppliers was $8.8 billion, up 22.2 percent from the second quarter.

"The HDD industry as a whole returned to profitability in the third quarter, marking the first time the business has been in the black since December 2006," said Krishna Chander, senior analyst for storage systems at iSuppli.

Leading HDD maker Seagate Technology LLC in the third quarter reported a gross margin of 24.6 percent—up 300 basis points from 21.6 percent in the second quarter. Second-ranked HDD supplier Western Digital Corp. (WDC) reported a gross margin of 18.4 percent—up 340 basis points from 15.0 percent in the second quarter. Number-three HDD maker Hitachi GST narrowed its losses to $58 million, down from -$174 million in the second quarter, and projected an optimistic fourth quarter with a profit estimate of more than $9 million.

"The revival of HDD profits is being driven partly by the consumer-electronics market," Chander said. "Shipments to consumer-electronics applications represented 17 percent of the total HDD market in the third quarter, up from 15.5 percent in the second quarter. iSuppli expects this to continue to grow to 22 percent by the third quarter of 2008. The rising adoption of HDTV is spurring demand for higher-capacity HDDs for DVRs, helping to propel consumer electronics sales."