I was chatting up a solution provider last Friday about one of the stories I’m writing for this month, and we got to talking about the still-widening ripple effects from the hard drive assembly and component facilities flooded last month in Thailand.
As reported on SearchITChannel, the devastated area is responsible for a large portion of the industry’s hard-disk drive production, and companies like Western Digital and Seagate are having supply chain problems as a result. Now, market research firm International Data Corp. is reducing its outlook for both hard drives and personal computer shipments as a result of the natural disaster.
IDC said that during the first half of 2011, Thailand accounted for 40 percent to 45 percent of the worldwide production of hard disk drives. Almost half of that capacity was taken offline because of the flooding. (What hasn’t been flooded has been compromised by lack of access and electricity outages.) The shortages will continue a least into the first quarter of 2012, according to IDC. Here’s what else the research firm predicts:
- The impact on fourth-quarter PC shipments will be about 10 percent, because most of those units have already been produced or are in production.
- In a “worst-case” scenario, PC shipments for the first quarter of 2012 could be off by 20 percent.
- Hard-disk drive prices will rise, as demand outstrips supply. Note to self: Check into whether this dynamic motivates more production of configurations that include flash drives, unless (of course) they are produced in the same facilities.
- There could be some market share shifts as a result, so IT solution providers might wind up reconsidering their vendor suppliers on both a short-term and long-term basis.
- Pricing should be stabilized by June, but it could take until the second half of the year to ramp back up to typical production volumes.
Said John Rydning, IDC research vice president for hard-disk drives and semiconductors, in a statement:
“In response to the crisis, priority will be given to the large PC manufacturers that drive [hard-disk drive] shipment volumes as well as to the high-margin products used in enterprise servers and storage. But the [hard-disk drive] vendors can’t neglect their smaller customers, whose business will continue to be important once capacity is fully restored. Some interesting production and partnering arrangements with customers can be expected as [hard-disk drive] vendors scramble to bring production back up while simultaneously angling for strategic advantage.”