By Maximilian Clarke
The floods that have devastated Thailand’s populous heartland continue to rise, and now a fifth of Bangkok lies submerged.
Nikon have slashed production after their facilities near Ayutthaya were damaged, and Honda followed suit. But the latest casualty of the flooding, the rising and tragic toll on human life notwithstanding, has been the personal computer industry.
The sale of PCs and laptops is has been significantly affected by the shortage of hard disk drives, caused by many production facilities in the lowlands skirting Bangkok closing due directly to flooding or to logistical problems in the surrounding area.
“Around 40% of the world’s disk drives are manufactured in Thailand, with leading global supplier Western Digital producing 60% of its output alone, in the flood-ravaged country,” says David Payne, Purchasing Manager of IT outsourcing specialist, Quiss Technology plc.
“News is filtering through of closures to more than 14,000 factories across the region, from disk drive manufacturers to the supply chain businesses that supply them with the parts. The interconnectedness of the PC supply chain is highlighted by NIDEC, which commands a 75% share of the spindle motor market, producing more than a quarter of its output in Thailand. The plant there is flooded and is not expected to return to full production for months.
“This will cause a major supply bottleneck, but the effects won’t be felt maybe until December, when the stock of disk drives held by PC manufacturers finally runs out. Supply and demand pressures however, dictate we can expect to see higher prices for drives and therefore PC and laptops appearing almost immediately. If you’re planning an upgrade, strike now, before the price rises hit the UK; if not sit tight until spring 2012, when the market returns more to normal.
Some commentators and industry insiders believe the Thai tech industry has been severely weakened by the floods and that it will be more than a year before it fully recovers.
When a natural disaster of this scale hits a country it is difficult to see past the human tragedy and think of business. But as the world becomes ever more dependent on global supply chains and computers to access the shrinking world, it is perhaps right to stop and consider the global implications of local difficulties.
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