Thai floods: Natural disaster ripples through the tech world

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By Anderson /  07 Nov 2011 , 11:07

If you’re looking to buy a new hard drive, you might want to wait. Prices are spiking after horrific floods in Thailand have shuttered hundreds of factories, including those of several hard drive and digital camera manufacturers.

The human toll from the floods that haveaffected 64 of the country’s 77 provinceshas a staggering human toll. More than 500 are dead and the waters have inundated the homes of 15% of the nation’s 67m people.

An aerial view of a flooded Honda car factory in Thailand
An aerial view of a flooded Honda car factory in Thailand. Reuters

The economic toll has been equally staggering. According to the Thai Industrial Estate and Strategic Partners Association, floods have swamped seven massive industrial estates, home to 891 factories that employ 460,000 workers.

Hard drive makers Western Digital, Seagate and Toshiba have been especially hard hit. The production of hard drives is expected to slump 27%, dropping from 173m to 125m units, this quarter due to the floods, according to IHS iSuppli, which says it will be worst downturn to hit the hard drive industry in three years.

Computer makers are already feeling the impact, with Taiwanese computer giant Asustek saying that it would run out of hard drives by the end of November. Up to half of the world’s hard drives are made in Thailand, and the country is second only to China in terms of hard drive production.

Due to shortages caused by the floods, the average price of hard disks is expected to rise by 10%, according to iSuppli. Drive markers will be looking to try to meet their revenue targets by increasing prices.

However, Asustek CFO David Chang told Reuters that the company is seeing some hard drive prices surge 20% to 40%.

Tech news site TechSpot looked at prices on the popular computer gear supersite Newegg in the US to see what effect the flood-driven shortages were having on the average consumer. They found that a Samsung 1TB drive had doubled in price. Marc Bevand, who works for a computer security firm, blogged that the price of some 1TB drives have increased by a staggering 180%.

That’s a bit odd because iSuppli said “specific HDD plants affected by the flooding make devices designed for mobile computers”, and the drives that the TechSpot and Bevand looked at were all drives for desktop computers.

Asustek must have been taking just-in-time manufacturing to the extreme because iSuppli says that most computer makers would have sufficient supplies to see them through the end of the year. The real pain might come in 2012 as the shortage is expected to last at least six months with many factories expected to remain shut until the new year.

Of course, hard drives aren’t just in computers anymore. They are also in DVD and other digital video recorders.

Hard drives aren’t the only bit of tech affected by the flooding. Japanese digital camera makers Sony, Canon and Nikon all have plants in Thailand. Due to the disruption, iSuppli predicted that camera shipments would fall in the last quarter of 2011 and possibly the first quarter of next year.

Sadly, the floods in Thailand are also expected to cause another blow to Japanese manufacturing, which was just starting to shake off the affects of the devastating earthquake and tsunami earlier this year. In addition to hard drives and cameras, the floods are expected to hit the Japanese auto industry, again, and also a few semiconductor makers that supply the Japanese market.

It has led the Japanese central bank to consider working with its Thai counterpart to provide support to companies hit by the floods.

Do you work in the tech industry? Have you seen prices spike in key parts for your projects? Where are you finding alternatives to components you used to source in Thailand?


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