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Demand for HDD not met.* |
A shortage in Thailand of hard disk drives (HDD) has resulted in prices spiking 20%, while computer prices are expected to jump by between US$15.9 and US$31.9 in many markets over the coming month as a result. That could affect overall electronics sales over the year-end sales season.
Thailand's worst flooding in seven decades may indeed lead to a global shortage of drives through the first quarter of next year, since Thailand is the world's second-largest exporter of HDDs behind China, with 25% of worldwide HDD assembly facilities.
Supreme Distribution (Thailand), a local computer vendor under the DTK brand, expects prices of entry-level HDDs with a capacity of 500GB to 1,000GB to have increased by US$9.5 to US$12.7 - or 20% - as a result of the floods.
SVOA, a local computer maker and distributor, said HDD prices rose by 25% in the market in the later part of November and the shortage was continuing.
The ongoing merger and acquisition deal between HDD giants Seagate of the US and Japan's Toshiba along with a similar deal between the American Western Digital (WD) and Japan's Hitachi Global Storage Technologies have also slowed global HDD production over several months.
These merged companies are looking to outsource HDDs from lower cost producers on the Chinese mainland, and suppliers through Hong Kong and Singapore.
The prices of random-access memory chips (RAM), another key computer component, also rose by between 3% and 5% in tandem with HDD rises.
WD, the world's largest HDD manufacturer by volume, has 37,000 workers in Thailand and production accounts for 60% of the company's total capacity. In the second quarter WD made 53.8 million drives, giving it a 32% share of the global market.
Toshiba employs 3,900 workers and approximately 50% of its manufacturing capacity is in Thailand. In the second quarter, Toshiba was the fourth-ranked HDD supplier, with 17.8 million units and a 10.6% share.
Japan's Nidec restarted its motor factory No. 1 in Thailand's Bangkadi Industrial Park, after production stopped due to the floods. Its factories supply more than 70% of all global HDD motors.
Nidec is understood to be developing new factories for HDD motors in the Philippines and China to offset lost output.
Asia's PC makers, already grappling with the prospect of subdued year-end consumer demand, are faced with a likely further slowdown in the Lunar New Year sales season.
A likely shortage of the key component could mean weak sales in the first quarter, affecting an industry already facing the challenge of smartphones and tablets such as Apple's iPad.
Globally, there's also slower corporate spending on technology hardware.
World output of hard drives could fall as much as 30% in the final three months of 2011 and manufacturers are now scrambling to snap up existing inventories. Much depends on how fast production returns to normal in Thailand.
Japanese investment shift
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| Flooding hits Japanese investment.♦ |
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The floods have already affected the strategies of several other Japanese companies, which are the largest foreign investors in Thailand. They are now believed to be investing more in factories in neighbouring countries Indonesia and Vietnam.
Honda, Toyota and Pioneer lowered profit forecasts after their Thai operations were shut down by the floods,which have also affected the supply chains of Japanese auto and electronics makers Canon and Nissan.
Seven industrial estates north of Bangkok with 891 factories, include facilities operated by Isuzu and a unit of Mitsubishi Heavy Industries.
The distribution of Japan's supply chain across the region may shift amid increasing affluence, consumption and plans to unify the region's economy.
10-member ASEAN is determined to establish a single market economic zone by 2015 modelled after the European Union, but without a common currency.
Still, the floods may have cooled regional investment interest in Thailand. New investment dropped in October and in November compared to previous months.
Meanwhile, Thailand's economy will emerge from the flood crisis and a slowing world economy with lower economic growth of 2.6% this year, said the Bank of Thailand.
The central bank expects a rebound in consumption and rehabilitation in the post-flood period will spur private investment to support growth of 4% next year.
However, the revised forecast for this year was based on an assessment made up to mid-October, when flooding was limited to industrial estates and some western Bangkok districts. There is still a risk that Bangkok will be inundated for a longer period than at first considered.
The central bank estimated the output loss from the flood at US$383 million so far.
from Kamonchanok Potong and Simon Lo, Bangkok Office
Image courtesy of:
* ©iStockphoto.com/matusciac
♦ Xinhua News Agency
