One of the world’s top hard drive producers is under water. What it means for the market.
Beginning in late July and early August, floods caused by monsoon rains swept over Southern Thailand, causing an estimated $5.1 billion in damage and killing over 500 people as of November 6. These floods, deemed the worst of their kind in the last five decades, aren’t expected to recede until mid-December.
Although the Thai government took drastic measures to protect the manufacturing sectors, which are located in the heart of the flooding, production in most of the industrial districts are now at a standstill. This has hurt the Thai production and export of electronic and automotive items, thus sending ripples throughout the world’s economy.
A market that was severely impacted was the production of hard drives and hard drive components, which has been brought to an indefinite halt due to the flooding.
According to an article on ComputerWorld.com, many big name electronic companies specializing in hard drive development, such as Western Digital, Toshiba, Seagate, and Hitachi, based the bulk of their production facilities in southern Thailand, making Thailand the 2nd largest producer of hard drives and hard drive parts in the world. This being the case, the halt in production has already had an impact on the world’s electronic market.
Manufacturers are estimating that production of hard drives will dip 25% worldwide and that shipments of disk drives out of Thailand will decrease by 28% within this quarter. Prices for hard drives are expected to go up by 10% worldwide, which will impact both consumers buying external hard drives and eventually computer makers.
Prices and sales for the computer market are supposed to remain pretty stable throughout the end of the fourth quarter, leaving pricing till the end of the year relatively untouched. And due to the poor global economy, computer companies will have a hard time increasing their prices too much to compensate. But the consumer hard drive market has already taken a hit, as prices for external hard drives are steadily increasing.
Laptop makers will feel the shockwave the most. The majority of the parts for the small hard drives that fit into laptops were developed in the facilities based in Thailand. The projected prices for laptops and computers in the future vary, but all projections agree that an overall increase in price should be expected.
Hard drive manufacturers who were hit by the flooding are attempting to increase the production of other facilities around the world. Computer makers, in order to meet their current quarterly production, are looking into different manufacturers of Hard Disk Drives (HDDs) and even exploring alternative methods of data storage, including the utilization of flash storage or Solid State Drive (SSD) storage.
Although the hard drive industry has taken a hit, most estimations of recovery are generally placed in the end of the first quarter or the beginning of the second quarter. Vice President of Research at International Data Corporation (IDC), John Rydning, expects that “the HDD industry will find a way to return to pre-flood production levels by March, but by that point HDD supplies will be at extremely low levels." Rydning continues, "It's still going to be a pretty painful period from December through February for most HDD customers."
The flooding will have a direct impact mostly on the companies producing hard drives. Although recovery is possible, these corporations will have a hard time getting back to where productions and prices once were. Most other parties will be indirectly affected. Laptop makers, as well as PC makers, will be affected the most of these parties. Makers will have to deal with higher prices of hard drives and wait as other developers can produce enough hard drives to meet their quotas, thus having an influence on the prices of their products to consumers.
Consumers will notice prices go up for electronic equipment using HDD storage in the future. The prices for external hard drives are already exponentially increasing, but the prices for computer products should stay relatively the same during holiday shopping. But within the next few months of the coming two quarters, buyers can expect to see an influx in price.