Flood in Thailand to Create a 'Hard Drive-Crisis'

Floods in Thailand trigger a massive decrease in production of hard drives that are used in computers and TVs etc. With the factories closed for months there is expected to be a 30% fall in the worldwide production of the hard drives as Thailand is the ranks at no. 2 in hard drive production in the world.

According to analysts at IHS iSuppli this “threat” has scrambled the computer manufactures which are rushing to use the previously existing inventories. Intel has said that they had looked forward to this kind of situation but they still expect that unaffected sources would keep supplying them with sufficient amount of PCs. Jon Carvill, the Intel’s spokesman said, 

The PC supply chain has proven to be very resilient, as most recently demonstrated in the response to the earthquake in Japan.

Top hard drive makers such as Western Digital and Seagate had factories in Thailand. Due to the floods WDC.N factories have closed but Seagate plants are still operational. However, Seagate warns that it could face a shortage of parts.

Apple’s chief executive said that there might be an industry shortage of disk drives and that PC production might be in jeopardy.

However Intel expects that this shortage will not affect the industry in the fourth quarter that has led many analysts to believe that the interference in the PC production could start from December. However some don’t agree with Intel, as ABR investment Strategy said,

There's a major disconnect here. We don't see how they cannot be affected and we're recommending investors avoid Intel at these levels.

Western Digital said that Thailand accounts for 60% of their production. And with their customers having only 2 weeks’ worth inventory and distributors having 4 weeks’ worth, the supply of hard drives in the December quarter can be a much as 10% less than the demand. This estimate was by Rodman & Renshaw.

HIS iSuppli analyst said that customers will face a shortage by early 2012; Dell on the other hand said that this shortage will not affect their productions of this quarter but did not say what will happen in the next one. As far as HP is concerned, the spokesman declined to comment on the issue.