Last year’s flood in Thailand continues to affect this year’s electronics supply chain. IHS in December estimated that damages from the flood will result in a 3.8 million-unit shortfall in PC shipments in the first quarter of 2012 compared with the company’s previous forecast, issued in August. IHS now expects that global PC shipments will be reduced to 6.8% in 2012, from the previous growth of 9.5%.
The catastrophic flooding in Thailand has also affected the production of several key end electronic products, and other subsystems including automobiles, car components, cameras, analog and discrete semiconductors, and hard disk drives. The grave disruption in the electronics supply chain is having an indirect impact on the production of other devices, including notebook PCs, dynamic random access memory (DRAM), cameras and set-top boxes. The worst-impacted country is Japan after Thailand that maintains extensive manufacturing operations in the flood affected areas.
Thailand is the world’s second-largest producer of HDDs after China and is a major supplier of hard drive parts. IHS estimates that 30 percent of HDD production will be lost in the fourth quarter this year because of the disaster. This will result in a significant shortage of HDDs. This low inventory of HDDs will cause average HDD pricing to rise by 10 percent in the fourth quarter compared to the third.
IHS estimates that worldwide PC shipments in the first quarter of 2012 will be reduced to 84.2 million units, from its earlier forecast of 88 million. Compared with the company’s previous prediction of 399 million, this reduction has forced IHS to lower estimates for total PC unit shipments in 2012 to 376 million. The market-research company IHS says that this result is partly due to a shortage of hard-disk drives, along with weakening demand due to the popularity of tablet PCs among others.
IHS expects the hard-drive supply chain to improve in the first quarter but it will take. The overall hard-drive supply chain would be able to meet demands by the end of the third quarter of 2012. Many hard-drive makers have moved production outside Thailand to boost supply chain. PC shipment is expected to rebound from the shortfall in the second half of the year. The market for hard-disk drives could face an inventory surplus by the end of 2012 as facilities in Thailand returned to its normal production.
Overall, the Thailand flood represents the second major natural disaster to affect Japan last year, after the March earthquake. Thailand plays an important role in the manufacturing operations of Japanese companies. An estimated 1,800 Japanese manufacturers operate in Thailand and 450 Japanese businesses are located in seven flood-hit industrial parks.
