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Thailand Flooding and the Price of Hard Drives

Posted by KL Tech Muse at 7:26 AM on November 10, 2011

If you are thinking about getting a hard drive you may want to wait. Thailand has been hit by terrible flooding during the yearly monsoon season. Up to 500 have died and whole areas have been devastated including areas where the majority of the world’s hard drives are manufactured. Companies including Western Digital and Toshiba have been hit hard. As reported by the NY Times Bang Pa-In, Thailand which produces one-quarter of the worlds sliders a vital hard drive component is almost completely under water. Piper Jaffray believe that the supply of hard drives may run dry by the end of November. Prices may rise anywhere from 10 to 60 percent. There maybe a shortage of up to 60-80 million hard drives in the fourth quarter of 2011 and the shortage may only get worse. Full recovery of the market isn’t expected until late 2012.

Just in time for the next monsoon season. Climate change may only increase the flooding next year unless Thailand figures a way to control it. Unfortunately the very rice fields that helped to control the flooding in the past have been replaced by the factories that manufacture the hard drives. Companies may think of moving some of the processes outside of Thailand but that will take years and a lot of money. Companies may decide that the cost of moving is greater than the cost of dealing with flooding and choose to stay.

The hard drive shortage is already being felt by small businesses who sells or purchases hard drives. They are having trouble getting the hard drives they need and their prices are going up. The longer the problem continues the more the problem will spread to anything with a hard drive in it. Which includes desktops, laptops, gaming systems, and more. Not all hard drive companies were hit equally Seagate whose plants are in the highlands of Thailand was not effected by the monsoon directly, however it says it will have difficulty getting some parts. SSD drives are not effected either. Gus Richard an analyst at Piper Jaffray believes that there was an over reaction to the economic impact of the Japanese disaster and an under reaction to the Thailand disaster. This is at the time when large data centers are being built, data centers which require more and more hard drives. So the shortage and higher prices will most likely continue until late 2012.