When nature is in a rage there are consequences. Industries come to a grinding halt and it strains trade to such an extent that it takes months or years to return to performance levels prior to the natural disasters. There are countless examples of this: Hurricane Katrina and the great Tsunami that shook Asia and the recent floods in South East Asia.
I have been keeping an eye on a particular industry that I think is going to be hit hard, namely storage (hard drives in particular). Western Digital, Seagate and Toshiba all have manufacturing plants in South East Asia and all have made it known via press releases that they expect stock delays and shortages due to the flooding.
A Seagate press release in the middle of October stated:
Currently, all Seagate factories in Thailand are operational and there are no logistical issues with employees reaching its factories. However, the hard disk drive component supply chain is being disrupted and it is expected that certain components in the supply chain will be constrained. Given the volatility of the situation it is unclear what the magnitude of the supply chain disruption will be to Seagate’s hard disk drive output from its Thailand operations.
Seagate is actively managing its supply chain and factory output to align production capabilities and optimize its build schedule to meet customer requirements. As a result of the disruption caused by the floods, Seagate anticipates hard drive supply will be constrained throughout the current quarter.
This devastating natural disaster has tragically taken hundreds of lives and displaced many families. At this time, Seagate reports that all of its employees in the region are safe.
As the impact has started to take effect worldwide, hard drive pricing has increased and product launches that are dependent on hard drives, have been rescheduled for early 2012. Is there any solution to this situation? I think due to the complexity of it, manufacturers might follow Foxconn’s example and look to open plants in new locations. Foxconn have opened a plant in Brazil to augment its production base that is in China.
Have you been indirectly affected by the hard drive shortage?
