Apple, Dell, Intel Expect HDD Shortage to Have Drastic Impact on PC Market.

Shortages of Hard Drives May Slowdown Sales of PCs

[10/23/2011 11:59 PM]
by Anton Shilov

Although the high-tech market tends to recover quickly from almost all kinds of disasters and large manufacturers often try to reduce their risks, the flooding in Thailand and consequent potential shortage of hard disk drives will clearly affect the whole PC industry in the coming quarters. But while giants like Apple, Dell or Intel are concerned, they remain relatively optimistic.

Intel, the world's largest supplier of microprocessors on the planet, said on Friday that it was keeping an eye on a dynamic situation in Thailand that directly impacts that hard drive supplies, but expects existing stores of drives and unaffected sources to help keep the PC industry supplied.

"The PC supply chain has proven to be very resilient, as most recently demonstrated in the response to the earthquake in Japan," said Jon Carvill, a spokesman for Intel, reports Reuters news-agency.

Apple, which sold almost 4.9 million Macintosh PCs in the third quarter of calendar 2011, said that it was concerned about shipments of hard disk drives (HDDs) and admitted that the supply of hard drives will be tight going forward based on reports from companies like Seagate and Western Digital.

"[HDD supply] is something that I am concerned about. I am virtually certain there will be an overall industry shortage of disk drives as a result of the disaster. How it affects Apple? I am not sure, but we placed our assessment to the degree that we can make one in the [revenue] guidance [for Q1 FY2012] that Peter has already given you in the $37 billion number," said Timothy Cook, chief executive officer of Apple, during the most recent conference call with financial analysts.

Hewlett-Packard, the world's largest maker of PCs, reportedly declined to comment how the potential HDD shortage affects the market. But Dell, the third largest producer of PCs, said the flood would have little impact on its quarter ending this month, but did not say how it expected to be impacted beyond then.

Due to the severe flooding in Thailand, Western Digital, the No. 1 maker of HDDs, had to halt production of hard drives at its facilities in the country. Seagate, the second largest producer of hard drives, continues to assemble the drives, but claims that short supply of components can reduce its production capacity.

Tags: Seagate, Western Digital, WD, HDD, Apple, Intel, Dell, HP, Lenovo, Business

Discussion

Comments currently: 1
Discussion started: 10/24/11 02:43:09 PM
Latest comment: 10/24/11 02:43:09 PM

[1-1]

The politics of the situation there are interesting, and factor into what is happening.

Thailand is used to flooding, and they have various flood management abilities. This year's flooding is exceptional in terms of the severity and how widespread it is. However, in previous decades, the water flow would have been different. It typically would have gone through Supanburi province to Nakornpathom, then Samutsongkram, then to the gulf. However, this time, there was an order not to let the water go through Supanburi. Thus, all the water went through Ayuthaya (the old capital), then Lopburi, then Patumthani, then down through Bangkok (including the industrial facilities of the hard drive manufacturers).

So why wasn't the water sent through Supanburi as in the past? That area has many rice fields... which belong to the exiled PM Thaksin and Mohamed Al-Fayed. How can he accomplish this while exiled? He still has many connections in Thailand of course, including business connections with another former PM who has an influential position in the current government--and whose hometown is in Supanburi.

Regardless, it's an incredible natural disaster for Thailand and its people, and it has global implications. Their political situation/history and how it may be affecting flood management could be making a very bad situation even worse, however.