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Western Digital Restarts One Thai HDD Plant

12/19/2011 12:01:00 AM Eastern
NEW YORK – While the floodwaters in Thailand continue to recede, hard-drive prices are rising even as HDD factories start to come back online.

In addition to increased costs, the reduction in the number of hard disk drives (HDDs) available is having a strong impact on the PC industry.

Those drives that are making it to market in both the aftermarket and OEM side are considerably more expensive.

IHS’ most recent data, which uses the fourth quarter of 2009 as a reference point, indicates that pricing for almost every drive capacity has risen starting in October. That is the month the flooding began in Thailand.

Previously, drive prices experienced double-digit price drops every month leading up to when the natural disaster began.

The 3.5-inch, platter 7,200 rpm drives with storage capacities ranging between 160GB and 1TB have been the most affected, with prices rising from between 22 percent to 38 percent. The 5,400 rpm 2.5-inch, drives with capacities of 160GB and 320GB have seen single-digit percentile increases.

The HDD type that has not seen any change in pricing are the 3.5-inch, 7,200 rpm 2TB models. Prices have continued to decrease each month despite the crisis, although at a slower rate.

Due to the overall shortage on Dec. 12, Intel lowered its financial forecast for the current quarter based on how the HDD shortage will impact computer shipments.

“The worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard disk drive supply shortages,” the company said.

Intel expects HDD supply shortages to continue into the first quarter, followed by a rebuilding of microprocessor inventories as supplies of hard disk drives recover during the first half of 2012.

Hewlett-Packard’s CEO Meg Whitman and Dell said in November, when the floodwaters were at their height, that the HDD shortage would create problems for their companies for the next few quarters.

IDC noted that a worst-case scenario could see PC shipments depressed by as much as 20 percent for the first quarter of 2012 compared with the same period in 2011.

Earlier this month Western Digital reported that it restarted hard-drive production at its Bang-Pa-in, Thailand, facility during the last week.

The facility had been under up to 6 feet of water when it was inundated on Oct. 15. The factory was not expected to re-open for at least another week, the company said.

The area was pumped dry as of Nov. 17. Power was restored on Nov. 26, and production officially began again on Nov. 30.

At the same facility, Western Digital has removed all submerged slider manufacturing equipment for assessment, decontamination and refurbishment and expects to re-commence slider production in March 2012. At the same time, slider production will commence at another Western Digital facility in Penang, Malaysia.

The company’s second hard-drive facility, located in Navanakorn, was still under about 2 feet of water in early December. The industrial park was expected to be pumped dry by mid-March at which time the facility can be refurbished.

Western Digital is forecasting a 50 million to 60 million hard-drive shortfall in production for the fourth quarter due to the flooding. This will force a severe constraint on supply into at least the second quarter of 2012, it reported.

The Seagate and Hitachi GST factories were not damaged by the flood, but were shuttered for several weeks due to component shortages.

Toshiba was also hard hit, with 50 percent of its HDD production capability in the flooded zone.

HDD production supply is not expected to catch up to demand until the second quarter of 2012.
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