Thailand Hard Disk Drive Production Down for 56 Days Say Forecasts

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Thailand floods have stopped production of HDDs, which are used in most PCs, laptops, games consoles and media entertainment technology. IT supply chain expert, Iain Bowles, from Probrand, forecasts that given clean up times, plants are not expected at best to return to any level of production for 56 days. A knock on will be world shortage of this critical product early next year, sending prices of this high demand product skywards. The release looks at the challenges plants are facing and its impact on business.

This disaster is expected to hit the supply chain harder than the Japan Tsunami.
Assuming the floods sub-side as forecast, the IT industry and IT buyers will feel the impact of this event during the first quarter of 2012.

As Thailand takes stock of the worst flooding on record due to the confluence of high tides over the weekend, the supply of Hard Disk Drives (HDD) is forecast to hit rock bottom as the area producing around 70% of the world’s demand is set to be out of action for 56 days. And the global impact is forecast to be massive shortages of this vital product in the first quarter of 2012 as the disaster hits the supply chain harder than the Japan Tsunami, says Iain Bowles from http://www.probrand.co.uk

“At the start of the floods in Bangkok, the IT industry had four weeks or 28 days of finished disk drive stock in the supply chain. If the rains stop today it will be a minimum of 56 days before production can re-start. Thai authorities have said it will take two to four weeks to pump out flooded areas and that is even before any actual clean up can start,” he says.

“In comparison, when the Japan Tsunami struck, component stock in the supply chain sat at over 80 days, enabling recovery time before stock would become depleted. Stock levels in the supply chain act as a cushion for supply continuity but in this case, the HDD stock ‘buffer’ of finished products is simply too small given most plants will remain under dirty water for some time yet.

“Assuming the floods sub-side as forecast, the IT industry and IT buyers will feel the impact of this event during the first quarter of 2012 and some of the recovery process will still be influencing the supply chain into the later part of the second quarter.

“Global demand for HDDs continues to grow and last quarter hit 177M units, which equates to 59M units per month, and is forecast to hit 180M next quarter. However, the impact of the floods is expected to cause a 20M unit shortfall over demand per month. As a direct result prices could rise by up to 25% for hard disks and this will impact finished products down the line as well.”

Manufacturer status is changing by the hour but disruption is being seen at the key HDD producers, which include Western Digital, Seagate, Hitachi Global Storage Technologies, Toshiba/Fujitsu and Samsung Electronics. Apple, Sony and Toshiba have all confirmed they believe HDD shortages will prevail.

Bowles concludes: “Thailand does not have the same culture or infrastructure as Japan, so recovery may be slower than post-Tsunami.

“For manufacturers, I suspect we will see attempts to move production to other geographies such as Malaysia. However, much of the specialist machinery required to switch production sites is under water and cannot be accessed via flooded roads. This truly is another very testing time for the global ICT supply chain and business needs to be prepared for HDD shortages.”

Iain Bowles is available for interview and can offer more detail around the supply chain and production status.

Iain Bowles has been in the IT industry for several decades and has visited the main ICT manufacturing geographies many times in a previous role as sales & marketing director at Fujitsu. For example, he has visited Japan’s Tsunami effected prefecture over 80 times. He is well respected throughout private and senior government circles for his deep understanding of the IT supply chain and cost structures. He is available for interview.

About Probrand
Established in 1992, Probrand is a major supplier of top branded computer products. It provides ICT through traditional and online channels (http://www.theITIndex.co.uk). Located in the heart of Birmingham, and employing more than 160 people, Probrand is a multi-million pound corporation servicing a wide range of business and public sector customers throughout the UK.

Where are HDDs used
HDDs are used as secondary storage in PCs, laptops, games consoles and other entertainment technologies. They play a vital role in supporting data backups, business continuity and functionality. A PC or laptop without storage is little more than an internet browsing tool.

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matt royle
matt.royle@probrand.co.uk
07812 360349
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