Thai floods, hard drive shortage threaten PC sales

SAN FRANCISCO Sat Oct 22, 2011 6:21am IST

People are evacuated on trucks from a flooded area in Bangkok's suburbs October 21, 2011. REUTERS/Kerek Wongsa

People are evacuated on trucks from a flooded area in Bangkok's suburbs October 21, 2011.

Credit: Reuters/Kerek Wongsa

Related Topics

SAN FRANCISCO (Reuters) - A looming shortage of hard drives caused by floods in Thailand threatens to disrupt computer manufacturers as soon as December and hurt tech giants like Intel, Apple and Dell.

Thailand is the No. 2 maker of hard drives, used in laptops, servers and TV set-top boxes, and damage caused by flooding across the region could keep factories closed or hobbled for months, analysts and executives say.

World output of hard drives could fall as much as 30 percent in the final three months of 2011 and manufacturers that need them are now scrambling to snap up existing inventories, according to market research firm IHS iSuppli.

Leading chipmaker Intel said on Friday it was keeping an eye on a "dynamic" situation but expects existing stores of drives and unaffected sources to help keep the PC industry supplied. If manufacturers build fewer PCs, Intel sells fewer processors.

"The PC supply chain has proven to be very resilient, as most recently demonstrated in the response to the earthquake in Japan," Intel spokesman Jon Carvill said.

Top hard drive makers Western Digital and Seagate both have factories in Thailand, where flooding has killed at least 320 people since July and devastated industrialized areas in the center of the country.

Western Digital's factories are closed and Seagate, while its plants are running, warns it could face parts shortages.

Apple chief executive Steve Cook this week told analysts on a conference call he expects an industry shortage of disk drives.

PC PRODUCTION MAY BE IN JEOPARDY

Intel on Tuesday said the flooding would not affect the PC market in the fourth quarter.

Since then, details about the damage to Western Digital's factories in Thailand have caused some analysts to believe a shortage of hard drives could start interfering with PC production in December.

"There's a major disconnect here. We don't see how they can not be affected and we're recommending investors avoid Intel at these levels," said Brad Gastwirth, co-founder of ABR Investment Strategy, an independent research firm.

Western Digital said Thailand accounts for 60 percent of drive production. Its customers have about two weeks of inventory on hand and distributors have around four weeks of supplies.

As those inventories get used up, the supply of hard drives may be about 10 percent less than demand for the December quarter, estimated Rodman & Renshaw analyst Ashok Kumar.

With production in Thailand likely to be constrained for several weeks, customers will face larger shortages in early 2012, IHS iSuppli analyst Fang Zhang said.

No. 2 PC maker Dell 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.

A Hewlett-Packard spokesman declined to comment.

(Reporting by Noel Randewich, additional reporting by Supantha Mukherjee in New York; Editing by Bob Burgdorfer)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Shares Hit Record

Sensex, Nifty rise to second consecutive record high

Sensex surges 500 points on BOJ easing, L&T gains

The BSE Sensex and Nifty surged to record highs for a second consecutive session on Friday after Bank of Japan's surprise expansion of its massive stimulus programme raised hopes for additional foreign inflows, boosting blue-chips such as Larsen & Toubro.  Full Article 

REUTERS SHOWCASE

Wilful Negligence?

Wilful Negligence?

SEBI piles pressure on Sahara to sell overseas hotels  Full Article 

Indian Economy

Indian Economy

India's fiscal deficit in H1 almost 83 pct of full-year target.  Full Article 

M&M Earnings

M&M Earnings

M&M Q2 net profit down 4 percent, hit by poor monsoon.  Full Article 

Ban on E-Cigs?

Ban on E-Cigs?

Govt considers ban on e-cigarettes, sale of single smokes.  Full Article 

Commodities

Commodities

Silver futures in India hit four-year low on global cues.  Full Article 

BOJ Policy

BOJ Policy

BOJ shocks markets with surprise easing as inflation slows.  Full Article 

Shadow Banking

Shadow Banking

China's shadow banking sector growing rapidly, third largest in world - FSB.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage