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Wednesday, 19 October 2011, 21:41 HKT/SGT
Flood Disrupts HDD Production in Thailand

BANGKOK, Oct 19, 2011 (ACN) - Thailand, the world's second largest exporter of hard disk drives (HDD) behind China, has experienced its worst floods in more than 50 years, potentially leading to a shortage of HDD supplies during the current quarter that may last into the first quarter of 2012. While it is too early to gauge the extent of the impact of the floods, HDD supplies are likely to be constrained throughout the fourth quarter, according to Fang Zhang, storage analyst at IHS.

The current IHS HDD forecast, developed before the disaster, calls for production of 176.2 million hard drives during the fourth quarter, representing 25.9 percent of annual manufacturing in 2011. IHS likely will downgrade its fourth-quarter production forecast in light of the impact of the disaster.

Western Digital Corp. (WDC) and Toshiba Corp. have temporarily halted production of HDDs in Thailand, impacting a major portion of global hard drive manufacturing. The companies operate HDD assembly facilities in Pathum Thani province near Bangkok.

WDC, the world's largest HDD manufacturer in terms of volume, has 37,000 workers in Thailand, and production in the country accounts for 60 percent of the company's total capacity. WDC in the second quarter made 53.8 million HDDs, giving it a 32 percent share of the global market.

Toshiba employs about 3,900 workers in Thailand, and approximately 50 percent of the company's manufacturing capacity is in the country. In the second quarter, Toshiba was the No. 4-ranked HDD supplier, with 17.8 million units and a 10.6 percent share.

No. 2 HDD supplier Seagate has a head stack and head gimbal assembly (HGA) facility in Teparuk. The company also conducts slider, head assembly and HGA operations in Korat. However, both facilities have remained operational following the disaster.

The floods, which have swept the country in the last two months, may have affected operations for the supplier of a key HDD component—the motor. Nidec Corp. supplies more than 70 percent of all global HDD motors, and all the major HDD manufacturers—including WDC, Seagate, Hitachi GST, Toshiba and Samsung—source motors from the company. Nidec has two subsidiaries in the country: Nidec Electronics and Nidec Precision, both located in Ayutthaya, northwest Thailand.

HDD suspension assembly maker Hutchinson Technology also temporarily suspended operations at its facilities in Ayutthaya due to the flooding and a loss of power. Hutchins said it plans to increase production output at its U.S. assembly operations and will use existing inventory to meet customer demand.

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