Studio Post

First it was flooding in Japan with the tsunami, now flooding in Thailand. Thailand is a disaster of huge proportions, and it hasn’t received nearly as much attention as it should. While humanitarian concerns are the biggest issue, the flooding will also have an impact on the PC market next year, very possibly leading to short supplies and higher prices on some items which we’ve already noticed!

Hard drive assembly lines are modern wonders, with automation, robotics and expensive machines working in controlled environments. In Thailand, some factories are wiped out while others have sustained severe water damage. Attempts to move equipment and assembly lines to higher ground has resulted in damages that may not be repairable. Key parts suppliers have been hit just as hard, like Nidec and TDK/Magnecomp who make things like spindle motors, suspensions, and sliders. The slider is the block on the tip of a read/write head on which the record and playback head (wafer) is mounted. It is believed that will be the component most critically short in 2012. There’s no firm timeline for recovery of these factories and the conditions are likely to continue into the second quarter of 2012.

According to the worlds largest supplier of hard drives, Western Digital, 40 percent of the world’s hard drives are produced in Thailand, including 60 percent of it’s own production. As a result of the flood, the company will be able to make less than half the number of hard drives it normally produces.

Other countries that supply hard drives are Malaysia, Singapore and China, but their production is also expected to be constrained by the availability of specific externally-sourced components. Seagate expects a 20% decrease in it’s hard drive output.

With the shortage of supply rapidly approaching, I’m already seeing the price of drives going up. Hopefully other factories around the world can ramp up production, otherwise there may be a huge increase in demand for expensive solid state drives to make up for the shortfall.