Thai floods hit electronics supply chain

Severe flooding in Thailand is set to hit the supply of several electronic components particularly hard disk drives

Thailand produces about 70% of the world’s hard disk drives and production is expected to be out of action for at least 56 days. The floods are predicted to decrease sales by 20m leading to a 25% hike as demand outstrips supply.

The floods in Bangkok have hit the supply of hard disk drives (HDDs) harder than the Japan tsunami earlier in the year, according to IT supplier Probrand.

A global shortage of HDDs will last until the first quarter of 2012 at least, as the industry will need to recover for a minimum of 56 days before production can resume, said Proband.

Even if the rain in Bangkok stops soon production will not resume in time to prevent the shortage. Pumping dry the flooded areas alone will take up to 28 days, according to Thai authorities.

The amount of stock held in the supply chain (sometimes referred to in supply chain parlance as “slack”) is only enough to last four weeks. Therefore HDD stock levels are too low to compensate for the clean-up time.

Hardware suppliers such as Apple, Sony and Toshiba have confirmed that they expect HDD shortages for some time.

“When the Japan tsunami struck, component stock in the supply chain sat at over 80 days, enabling recovery time before stock would become depleted,” explained Probrand’s Iain Bowles.

These floods could lead to attempts to move production to other regions such as Malaysia, commented Bowles. “Much of the specialist machinery required to switch production sites cannot be accessed via flooded roads. This truly is another very testing time for the global technology supply chain and business needs to be prepared for HDD shortages.”