[jyl]

There are huge floods going on in Thailand. Industrial parks where the country's technology manufacturing plants are located have been inundated, plants that aren't flooded have been shut down, other plants can't get components from closed plants or can't ship over destroyed roads.

One part of the tech supply chain that is heavily concentrated in Thailand is hard drives. About 40-50% of global hard drive production is done in Thailand. Practically every major company in the industry has operations there. Nidec makes 70% of spindle motors, they have 6 plants in Thailand, and 1 to 3 are damaged. Other companies that make motors, heads, suspensions, media (disks) and other components are there. Western Digital has about 35-40% share of global hard drives, and 60% of their drives are made in Thailand. Seagate has about 35-40% share, and about 40% of their drives are made in Thailand. Hitachi and Toshiba also make drives there. The only major drive maker not located at least partly in Thailand is Samsung.

Western Digital shipped 58MM drives in Sep quarter. They just said in the Dec quarter, they expect to ship 22MM to 26MM - less than half. Seagate has said their production will be hit, but hasn't given numbers yet. Some of Toshiba's plants there are shut down, don't know how long.

Here is the impact. Global hard drive units were expected to be about 170MM in Dec quarter, and global production was expected to be about the same. It looks like production capacity equal to 40MM to 60MM units will now be non-functioning in the Dec qtr. A shortage of about 25%. Which is huge.

The industry runs very lean. There is about 4 weeks of inventory at the distributors, 2 weeks at the systems companies' assemblers, and about 1-3 weeks held by the hard drive companies. Only about 8 weeks of inventory.

The hard drive companies are already scrambling to allocate the inadequate supply. Most likely the most important customers will get the best treatment (Dell, Apple, IBM, EMC, etc). Probably the most profitable business will get some (branded hard drives sold at retail). Distributors are the least profitable customers, and they will probably not get anywhere what they need.

And pricing will go up, a lot.

So - if you will need a new hard drive in the next couple of quarters, buy it now.