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Thai floods hit Q4 hard drive production, says research firm

John Ribeiro | Nov. 1, 2011
The devastating floods in Thailand will cause a 28 percent quarter-on-quarter drop in hard disk drive (HDD) production in the fourth quarter, potentially affecting notebook production in early 2012, research firm IHS iSuppli said on Monday.

Western Digital temporarily suspended production in mid-October at its two factories in Thailand, which were inundated by floodwater, to protect its employees, equipment and facilities. Many of the company's component suppliers have been impacted, leaving material for hard drive production considerably constrained, said John Coyne, the company's 
president and chief executive officer in a statement last week on the company's website.

In the quarter to July 1, Western Digital shipped about 54 million hard drives from its facilities in Thailand and Malaysia, with about 60 percent coming from its sites in Thailand. Promising to do everything the company can to minimize any disruptions in its service or delivery of its products, Western Digital has asked its customers to "remain patient with us for the next few quarters".

Western Digital's proposed acquisition of Hitachi Global Storage Technologies, the hard drive unit of Hitachi, for US$4.3 billion in cash and stock, is still awaiting antitrust clearance from the European Commission. The company now expects to close the transaction in the fourth quarter, after having announced earlier that the acquisition would close in the third quarter.

Seagate said while announcing its fiscal first quarter financial results on Oct. 20 that it expects a significant impact to its production levels while its component suppliers in Thailand work to get their businesses up and running.

Given the severity of the situation and the extensive supply constraints caused by the disruptions, the effects on the HDD industry will be substantial and extend over multiple quarters, the company said.

The impact of the floods on the Thai camera manufacturing operations of Sony, Nikon and Canon has led iSuppli to anticipate a drop in overall camera shipments in the fourth quarter and possibly in the first quarter of 2012. Sony said last month that it was forced to postpone the launch of its new "NEX-7" high-end portable digital camera and cut production of another because a factory in Thailand was affected by the flooding.


 

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