The situation in Thailand is getting worse as water levels are increasing. As Thailand is a strategic location for the hard disk drive industry, accounting for over 30% of global capacity, the flooding has hit HDD makers hard. But based on the current situation, there should be limited impact on both PC shipment volume, according to TrendForce.
Due to the flooding, Western Digital shut down two local plants, which will result in a 60% capacity decrease and Seagate suffers from tight supply of components. For exmaple, Nidec, which controls nearly 80% of the global HDD motor market, has temporarily shut down seven factories; it is not yet known when operations will resume. In general, everything points to the fact that in several weeks the PC industry may be hit by shortage of hard drives. But not everything is that bad.
According to TrendForce, currently PC OEMs have an average of approximately two to four weeks of HDD inventory remaining. Along with HDD suppliers’ key component inventory, the industry supply chain has over two months of stock left. At the end of this period, the PC industry will enter its down season in the beginning of December, and the decreased demand will counteract any risk of material shortages. It should be kept in mind that the demand for PCs in China increases early in the year and it remains to be seen whether HDD manufacturers are able to fulfill the demand then.
If key component makers manage to resume operations in Thailand, PC OEMs should be able to avoid a shipment crisis. Meanwhile, some PC OEMs are seriously considering the adoption of SSD as a temporary replacement for HDD. However, as the price gap between SSD and HDD is still fairly wide, SSD adoption will likely only increase in premium PC lineups.
Tags: Seagate, WD, Western Digital, Samsung, Hitachi, HDD, Business
Comments currently:
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Discussion started: 10/27/11 02:55:46 PM
Latest comment: 10/29/11 12:15:32 AM
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Likely scenario: prices will rise and demand will thus fall-off; some HDD makers will be less affected and will try to boost production; Western Digital and Seagate will scramble to maintain production by using alternate suppliers, leading to quality problems.
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Posted by: BernardP
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Date: 10/27/11 02:55:46 PM]
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(I think this is interesting, so I'll repost... also want to add that the current expectation when the flooding will stop for Bangkok is one month at the earliest.)
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.
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Posted by: bluvg
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Date: 10/27/11 09:09:10 PM]
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They are going to raise prices anyway, even if the market slowed down after Christmas. Nobody will check if they are low on components. That's corporatism for you.
Maybe OCZ propriatary AGP SDDs will drop their prices now?
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Posted by: TeemuMilto
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Date: 10/28/11 08:28:10 AM]
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Anyway there is Toshiba HDDs, which I believe better in quality than those HDDs affected by flooding.
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Posted by: pogsnet
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Date: 10/29/11 12:15:32 AM]
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