With Thailand experiencing its worst flooding in generations, component manufacturers have been especially hard hit. The trickle down effect is having a huge impact upon hard drive manufacturers in particular.
Late last week Western Digital announced that their hard drive production facilities in Thailand were shutting down due to the extreme amount of flooding. It seemed like plants were safe from the rising waters but over the weekend things changed. Their facilities in the Navanakorn and Bang Pa industrial areas outside of Bangkok were inundated, likely adding equipment loss estimated in the millions of dollars to an already bleak situation.
Considering Western Digital is currently the largest hard drive manufacturer in the world and nearly 60% of their production volume comes from Thailand, channel shipments were bound to suffer. Even if these plants could get up and running again the infrastructure in Thailand needed to continue production –both in human and materiel terms- has been devastated.
Seagate on the other hand has been operating their own Thai factories at full capacity since the beginning of the disaster and hasn’t reported any flood danger. However, this doesn’t mean they’ve been spared in any way. For them, the issue is a lagging component supply chain which is becoming a bottleneck since many manufacturers of drive heads casings and other internal items have been affected by these floods.
These floods could impact smaller players in the HDD market as well. The bulk of final assembly for companies like Samsung and Hitachi GST may be located in other areas of the globe but like Seagate and Western Digital, many of their primary components will soon be in short supply.
So with hard drive production being affected so heavily, what does that mean for us consumers? We run the possibility of seeing high prices and limited availability at one of the most important times of the year. Indeed, some retailers like Newegg and NCIX have already begun limiting the number of drives a customer can purchase (Newegg is currently at a limit of one drive per customer while NCIX has announced a limit of two) as they gear up for supply shortages and price increases throughout the channel. Speaking of price increases, we have seen a spike of 15% to 30% in the cost of some models over the last 72 hours.
This couldn’t have come at a worse time since Christmas shoppers will see higher prices on everything from notebooks to PVRs. Flash memory isn’t safe from this turbulence either so expect its prices to increase as consumers begin looking for alternatives to HDDs. So gear up folks because the days of cheap storage space are about to end….for a few months at least. Our hearts and prayers go out to the people suffering through this disaster.