Record Thailand Floods to Crimp Hard Disk Supply Into Q1, IHS says.
Flooding in Thailand, where Western Digital operates two manufacturing facilities, will have “significant impact on the company’s overall operations and its ability to meet customer demand for its products in the December quarter,” the company said Monday. Western Digital was the top supplier of hard disk drives in Q2, with 53.8 million units shipped, 32.2 percent of the market, followed closely by Seagate with 31.3 percent, IHS said.
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Western Digital said it has suspended manufacturing operations in Thailand due to flooding over the weekend that affected the manufacturing plants and the company’s supply chain. Rising water penetrated the Bang Pa-in Industrial Park, where the company makes sliders for hard disk drives and assembles them, “inundating the company’s manufacturing facilities there and submerging some equipment,” the company said. Water had also begun flowing into the assembly plant in Navanakorn Industrial Park Monday morning, threatening the company’s facilities there, Western Digital said. The plants near Bangkok manufactured 32 million hard drives in WD’s quarter ended July 1 (CED Oct 13 p9), the company said. All WD employees in Thailand remain safe, and the company’s facilities in Malaysia, Singapore and U.S. are fully operational, it said. A company spokesman told us WD “will make all adjustments necessary to optimize throughput.” One constraint “is the availability of supply and we are working with suppliers through a dynamic situation to find solutions for customers,” he said. Western Digital will provide updates in its investment conference call Wednesday.
IHS iSuppli reported Monday that Thailand’s worst flooding in more than 50 years will likely lead to an industry-wide shortage of hard disk drives for the current quarter and possibly through Q1 2012. “While it is too early to gauge the extent of the impact of the floods, HDD supplies are likely to be constrained throughout the fourth quarter, said Fang Zhang, storage analyst at IHS. A quarter of the world’s hard disk assembly plants are in Thailand, which is second in HDD supply to China, IHS said.
The current IHS HDD forecast, compiled before the flooding, calls for production of 176.2 million hard drives during Q4, which would represent 25.9 percent of annual manufacturing in 2011. IHS said it would likely downgrade its Q4 production forecast due to impact from the disaster. In addition to Western Digital, Toshiba has temporarily halted production in Thailand. Both companies operate HDD assembly facilities in Pathum Thani province near Bangkok.
Number two HDD supplier Seagate has a head stack and head gimbal assembly facility in Teparuk, Thailand, and also conducts slider, head assembly and HGA operations in Korat, Thailand. Both facilities have remained operational, IHS said. Over a 2-month period, the floods may have also affected operations for Nidec Corp, which supplies 70 percent of the world’s HDD motors, a key HDD component, with all major HDD manufacturers sourcing motors from the company. Nidec’s Nidec Electronics and Nidec Precision subsidiaries are both located in Ayutthaya in northwest Thailand, IHS said.
Hard disk drive suspension assembly maker Hutchinson Technology also temporarily suspended operations at its facilities in Ayutthaya due to the flooding and a loss of power. Hutchins said it plans to increase production output at its U.S. assembly operations and will use existing inventory to meet customer demand.
Meanwhile, Mitsubishi Electric Group said Monday it will donate a total of 50 million yen (about $651,000) to aid flood victims in Thailand and to support recovery efforts.