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Thailand flood disaster: how it's affecting companies, employees, and their products

Beyond the immense scope of the disaster for the citizens of Thailand, the country's recent floods have had a profound impact on the many high-tech companies (and their employees) that do business in the region. Here's a look at some of the fallout.If you'd like to help with the flood relief efforts, the Red Cross' Thai site is accepting donations.

  • Jamie Keene

    Mar 30, 2012

    Jamie Keene

    HDD prices could drop by 10 percent at the end of April

    WD hard drive 500GB stock 640
    WD hard drive 500GB stock 640

    While a return to the pricing of a year ago is unlikely due to rising costs of production, it's still comforting to hear that supply is predicted to pre-flood levels of around 175 million units per quarter by Q3 this year. However, this contradicts earlier reports that Seagate expects supply to remain well below demand for the rest of 2012 as its suppliers struggle to recover.

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  • Sean Hollister

    Feb 29, 2012

    Sean Hollister

    Western Digital and Toshiba trade hard drive tech, clearing the way for WD / Hitachi merger

    WD hard drive 500GB stock 640
    WD hard drive 500GB stock 640

    Today, Western Digital just agreed to give Toshiba the equipment and intellectual property required to build consumer-grade 3.5-inch hard drives, but Toshiba won't be paying in cash. In exchange, the Japanese storage company will give Western Digital a 2.5-inch HDD facility that's been shut down since the Thailand flood disaster late last year. It sounds like a crazy deal, until you remember what's at stake: Western Digital needed to divest part of its 3.5-inch hard drive business in order to satisfy the European Union's conditions for a merger with Hitachi this year.

    Since Seagate already bought Samsung's hard drive business, the thought process went, a WD / Hitachi merger would leave the hard drive industry with only two major players in the consumer hard drive space, unless WD could be weakened appropriately. Now, Western Digital may have what it takes to merge with Hitachi at last, and we can all look forward to the repercussions until Toshiba takes up the slack. Both companies expect the deal to be approved next month.

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  • Nathan Ingraham

    Feb 1, 2012

    Nathan Ingraham

    Seagate's hard drive shortage from Thailand floods expected to continue throughout 2012

    seagate momentus xt hard drive 1000
    seagate momentus xt hard drive 1000

    Seagate released its Q2 2012 (fiscal year) results yesterday, and not surprisingly the company had some statements to make about the effect the Thailand flooding had on its business. The company acknowledged that hard drive shortages will most likely continue throughout the calendar year of 2012, with supply trailing demand by about 150 million units by the end of 2012. From an industry-wide perspective, Seagate said that 119 million drives were shipped overall, short of estimated demand for 175 million drives. These shortages have led to Seagate observing some shifts in how customers order its products — the company is making more long-term deals to lock down pricing, with some deals running multiple years, which is a trend that Seagate hasn't observed before.

    Despite the flooding, Seagate didn't have such a bad quarter — the company shipped 47 million units in the quarter, down four percent from the year-ago quarter, and pulled in $3.2 billion in revenue (up 18 percent year-over-year). Seagate actually made out better than some of its competitors in the flooding; its factories weren't directly hit, but it is dealing with shortages from component suppliers which has hurt the overall business. It sounds like this will be an ongoing issue for the hard drive industry for the rest of the year — hopefully consumers won't have to pay too much of a premium on storage in 2012.

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  • Sean Hollister

    Jan 25, 2012

    Sean Hollister

    Nvidia and AMD blame hard drive shortages for poor GPU sales

    WD hard drive 500GB stock 640
    WD hard drive 500GB stock 640

    Yes, you read that headline right: despite the fact that neither AMD nor Nvidia manufacture a product that requires a magnetic drive, both claim that the hard drive shortages that resulted from the 2011 Thailand flood disaster impacted their ability to sell graphics processors, and ultimately their bottom line. Both AMD CEO Rory Read and Nvidia CEO Jen-Hsun Huang had said last quarter that they didn't expect any impact at all from the floods — "it's really a non-factor," said Huang — but Nvidia just told the world that it may have earned roughly $116 million less revenue than the company originally expected due to the hard drive shortage (as well as Tegra 2 decline), and AMD told investors that it saw "a little bit of pressure in terms of hard disk" during its earnings call today.

    There's a perfectly logical explanation, of course, because we've heard this rhetoric before: with fewer hard drives, fewer PCs can be sold, period, and all component manufacturers suffer. Interestingly, though, Nvidia also suggests that some OEMs chose not to include GPUs in their systems at all due to the price of hard drives. Perhaps Intel's somewhat-improved integrated graphics and AMD Fusion aren't the only reasons discrete solutions are getting the heave-ho.

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  • Joseph Parish

    Jan 24, 2012

    Joseph Parish

    Western Digital hard drive prices rose 47 percent after Thai floods

    Gallery Photo: Western Digital My Book Thunderbolt Duo gallery
    Gallery Photo: Western Digital My Book Thunderbolt Duo gallery

    The floods in Thailand certainly had an effect on hard drive supplies and prices, and now Western Digital's earnings report for Q1 2012 attaches some hard numbers to the impact. Although prices rose 47 percent to $69 per unit over last year, WD sold 23.7 million fewer hard drives, a 45 percent drop. Some of that price jump can be attributed to increased manufacturing costs, but most of it went to towards profit with a gross margin increase to 32.5 percent over last year's 19.2. Overall, WD reported $199 million in expenses related to the floods and $2 billion in total revenue, down about half a billion dollars from last year. The company says its factories in Thailand should be back to pre-flood capacities by September 2012, with inventory pipelines replenished in the first half of 2013. But in the end, it looks like it could be a while before hard drive prices return to September 2011 levels.

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  • Chris Welch

    Dec 12, 2011

    Chris Welch

    Intel lowers Q4 revenue expectations as a result of Thailand flooding

    Intel Sandy Bridge Chips
    Intel Sandy Bridge Chips

    Intel will be holding a conference call in just a bit, and we'll updating with any further developments. 

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  • Eddie Fu

    Nov 23, 2011

    Eddie Fu

    Seagate CEO speaks about Thailand floods and resulting hard drive shortages

    Seagate Hard Drive
    Seagate Hard Drive

    Although Seagate's factories weren't directly impacted by the huge flooding in Thailand, the company has been affected by the inventory shortages of components crucial to its supply chain. All Things D recently interviewed Seagate CEO Steve Luczo, who assessed the road that lies ahead for the industry: supply shortages will continue until at least late 2012, and the industry may not return to normal until the end of 2013. And while manufacturers are adapting to the shortage by including fewer parts in their drives by using a single higher-density disk with two heads instead of two disks with four heads, Luczo says price increases are inevitable. Although Seagate doesn't plan to build factories outside of the flood zone because it views the situation as temporary, it's probably still a good idea to stock up on hard drives before prices start skyrocketing — or finally make the jump to SSD.

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  • Bryan Bishop

    Nov 17, 2011

    Bryan Bishop

    Sony resumes production of SLT and NEX cameras after flood-induced delay

    Sony NEX-7
    Sony NEX-7

    After postponing the release of its SLT-A65 and NEX-7 cameras due to the massive flooding in Thailand, Sony has resumed production, according to DPReview. The company has moved the production lines from its affected Ayuthaya site — which makes headphones and lens kits, as well as the cameras in question — to an operational plant further south in Chonburi. The flooding has had enormous repercussions not just for Thailand's residents but for the consumer electronics industry as a whole, with hard drive prices and availability seeing an immediate impact, and Sony pointing to the disaster as one of the driving forces behind its projected $1.2 billion loss this year. The new cameras had originally been slated to ship this month, but even with the plant change, no new release dates have been given yet.

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  • Thomas Ricker

    Nov 11, 2011

    Thomas Ricker

    Nikon: 1 series camera sales are strong, 'cannot keep up with demand'

    Nikon 1 series j1
    Nikon 1 series j1

    The Nikon 1 series of cameras are off to a quick start. Nikon says that sales are strong and supply of its first mirrorless cameras with interchangeable lenses cannot keep up with demand.

    As we previously reported, the floods in Thailand have already impacted production of Nikon's DSLR cameras and lenses. Nikon suspended operations on October 6th and is now busy procuring equipment in order to resume production at alternate facilities. Its goal is to begin anew from December with the aim of returning to normal production levels by the end of March 2012.

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  • Tim Barribeau

    Nov 7, 2011

    Tim Barribeau

    Prices climb and inventories drop from flood stricken hard drive manufacturers

    The disastrous flooding in Thailand could mean a shortage of hard drives for the next few months, with an accompanying massive price spike. This isn't the first time we've heard this news from the floods, but the effects are now beginning to show. According to DigiTimes, there could be a 10 percent shortage in hard disks from December until April as inventories will probably run out by the end of November, and production won't gear back up to full capacity until February at the earliest. Allegedly, this shortage has caused the PC manufacturers to go searching the grey market for more drives, which by their very nature have less stringent quality controls, and could mean a spate of PCs with less-than-reliable disks.

    The price hikes have already started to hit consumers, and if you want a new HDD, you'd best be getting one as soon as possible — this is not the time to be waiting for a post-holiday sale. ExtremeTech has looked at the price of number of HDDs, and since September they've all significantly spiked in price, some to more than double their previous cost. While SSDs don't seem to have been hit by the floods, they'll be more popular because of it, and may also rise in price.

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  • Tim Barribeau

    Nov 5, 2011

    Tim Barribeau

    Nikon factories to remain closed until 2012 due to Thailand floods

    Nikon factory flood
    Nikon factory flood

    Nikon has issued a third official note on the damage to its facilities from the ongoing flooding in Thailand, and it looks like it will be closed into next year. The company's Ayutthaya plant will begin production again in January and get fully back up to speed by March, but with its doors shuttered since October 6th, the damage has already been substantial. This factory is used for both Nikon DLSRs and its new interchangeable lens V1 and J1 cameras —and three to six months of limited production will make Nikon's newest gear very difficult to get hold of for the immediate future. The flood waters have receded from their 2-yard deep peak by about 15 inches, but that's still far too deep to begin repair work and Nikon is already estimating the financial damage at 65 billion yen ($830 million) in sales and 25 billion yen ($320 million) in income. This is the second major disaster to hit Nikon's production facilities in the last yea — the Japanese earthquake and tsunami significantly lowered its output earlier in 2011.

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  • Thomas Ricker

    Nov 2, 2011

    Thomas Ricker

    Sony forecasts $1.2 billion loss for the year

    Sony OLED tv
    Sony OLED tv

    When the fiscal year is done, Sony will have lost almost $8.5 billion from televisions over the last eight years. And while Sony has executed upon plans to restructure its TV business in the past, it has yet to successfully return the division to profitability. As such, there's little reason to trust management's latest "TV Business Profitability Improvement Plan" which aims to return the business to profitability by March 31, 2014.

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  • Nov 1, 2011

    Vlad Savov

    Asus facing HDD shortage due to Thailand floods, only has enough to last the month

    WD flooding
    WD flooding

    It's not a happy news sort of morning over in Taiwan, where Asus CFO David Chang has told Reuters he expects the company to lower its revenue estimates for the fourth quarter due to production constraints brought on by the floods in Thailand. Specifically, Chang's company says it has enough hard disk drives in its inventory to last only until the end of the month, at which point the only viable products it'll be able to ship will presumably be the higher-end SSD-equipped models. Of course, that's assuming there won't be a change in current circumstances, which is unlikely, but it does provide a stark illustration of the impact those floods are having on the electronics industry. Prices of hard drives are fluctuating pretty wildly at the moment, with rises between 20 and 40 percent according to Chang, and the likely outcome seems to be that at least some of this hardship will be reflected in the prices Asus is able to offer in stores.

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  • Dieter Bohn

    Oct 22, 2011

    Dieter Bohn

    Hard drive shortages and higher prices coming after massive flooding in Thailand

    A large shortage of hard drives is expected in the coming months due to the worst flood to hit Thailand in over fifty years. As you can see in these images, Western Digital has been hit hard by the flooding and the company has suspended production in Thailand. Obviously, it's going to take some time for Western Digital to recover from the flood damage to its factories. Other hard drive manufacturers (such as Seagate) will also be affected as component suppliers have experienced flooding. According to Western Digital CEO John Coyne, it will all add up to a significantly reduced supply of hard drives into 2012.

    CRN reports that prices on hard drives are already rising in distribution channels and companies in the industry are watching inventory closely; some distributors may be stockpiling drives rather than selling them until the situation on the ground becomes clearer. Just how the shortage will ultimately affect consumers is also up in the air and will depend on how Western Digital and its distributors allocate existing inventory. PC makers are taking notice, however: Apple CEO Tim Cook is on the record as expecting "an overall industry shortage of disk drives" and a Dell spokesperson said the company is "working with our hard drive suppliers to address potential impact for the remainder of the year."

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