PC Makers Run Short of Popular Drives

Lucas123 writes "The impact from the monsoonal flooding in Thailand over the past three months is now being felt by users as computer system manufacturers are unable to meet supply needs. Lenovo told its corporate customers this week that is has run out of a number of drives including several types of 7200rpm and 5400rpm HDDs. 'Akin to the hysteria when banks defaulted in the 1930[s], PC orders across the industry are being placed for which HD supply does not exist,' a Lenovo rep wrote to his clients. IDC this week said the HDD shortages that have resulted from the flooding of four major Thailand industrial parks will likely be felt into 2013. Western Digital and Toshiba have been hit the hardest. PC shipments are also expected to fall short by 3.8 million units in the first quarter of 2012 due to component supply shortages. Meanwhile, there has been some indication of retail HDD price stabilization, but for some of the most popular hard drives prices continue to soar."

Scam???

[spaceplanesfan]

I might be wrong, but I feel, really feel like the flooding wasn't that big factor

but rather its great excuse to jack up the prices.

I remember similar story about RAM and Taiwan earthquake, when it was found out that damages to facilities were really minimal.

Re:Don't bitch.

[InsightIn140Bytes]

And considering Thailand is a Buddhist country (the good Theravada kind), it doesn't really fit either.

Re:China to the rescue?

[Guppy]

Why isn't China in the hard drive business?

That's actually a very good question.

There's an parallel situation with semiconductor manufacturing. There's a interesting paucity of foreign companies with fabs in China. [wikipedia.org]. There's only about three entries from foreign companies. All the other fabs in China belong to the native Chinese company SMIC, which has substantial state investment... as well as a history of IP-theft lawsuits.

It's almost as if semiconductor manufacturing corporations were smart enough to foresee the long-term consequences of building up their own future competitors.

Re:Scam???

[fnj]

Uh, all the eggs were not in one basket. I heard figures of around 10-20% of world hard drive production that was in Thailand. Not even sure that ALL the production in Thailand was affected. Then there is sub-component production, which complicates the picture.

The real problem is that there wasn't excess capacity. Also, the just-in-time inventory fad where nobody actually stocks anything any more makes any disturbance like this much more critical. But mostly I think there are elements in the manufacturing, distribution, and retailing chain that are orgasmic about the opportunity for gouging afforded by the disturbance. As always, it's very difficult to pinpoint the profiteers, but they are clearly there.

Hope you guys are enjoying the invisible hand of the ingrown corrupt super-capitalist market which you worship. It's more like an invisible phallus raping you in your sleep.

Re:Post-flood hard drives

[fnj]

It's hard to predict, but it's also possible the quality will take a jump upward because the equipment is freshly reconditioned or certified.

Re:What do they expect?

[Bacon Bits]

Yeah, but it's a trade off. What if gas prices had fallen? American car companies would have been poised to dominate the market. Or what if, instead of flooding in Thailand, new local resources resulted in 50% lower costs there? You'd have to close your other branches as they would no longer be economical. What if that kind of thing already happened? Maybe there's a reason that geographic location is used for manufacture of hard drives (presence of rare earth elements like neodymium?).

It's all well and good in hindsight to say that putting all your eggs in one basket is wrong, but if building your factory within one river valley reduces costs significantly then one would argue that building anywhere else would be similarly irresponsible.

Re:Scam???

[TheRaven64]

I have a friend out there who's been sending photos. His entire ground floor is flooded. He ran out of food last week and had to go out to get more. This involved swimming from his house, with a crocodile (or possibly alligator, I'm not sure which you get in Thailand) watching him from the opposite side of the canal (apparently it attacked a few people, but no one was killed). This doesn't sound like the ideal conditions for getting the raw materials or workers to the factory, and shipping the finished product would be quite a literal description. Oh, and his landline Internet has been down for over a month, but he's able to use 3G.

hmm

[strack]

if only there was some sort of technology that could elevate the extremely high value factory above any sort of flood. i think i have the solution. i call it a 'hill'

jackpot

[sl4shd0rk]

What would be a nice to see: Global movement to help Thais get back on their feet.

What will actually happen: Drive manufacturers scream jackpot as visions of twenty years of price fixing begins. Self-involved consumers look everywhere for someone to shut-up and take their money.

Re:What do they expect?

[Fnkmaster]

The company that had split their factories 50/50 would already be out of business, because their competitors have a more efficient supply chain, are in a single facility, and thus have been undercutting *them* for the last dozen years. The geographic concentration problem of hard drive manufacturers is a result of cutthroat competition, not something that happened in spite of it.

In any manufacturing business where margins are incredibly tight (probably 2-3% net margins on average for hard drives and other pure commodity manufacturers of that sort), you can't spend a bit more than the next guy to buck the trend or you will get undercut for Dell's/HP's/etc. business, lose 20% of your gross sales one night, and find you can no longer cover your overhead and suddenly you're out of business.