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Thailand Floods to Significantly Impact HDD Industry

For WD only: primary manufacturing site inundated, second site at risk

Western Digital Corp. has extended the suspension of its operations in Thailand.

Over the weekend, rising water penetrated the Bang Pa-in Industrial Park flood defenses, inundating the company’s manufacturing facilities there and submerging some equipment.

At the other company manufacturing location in Thailand, Navanakorn Industrial Park, the park flood defenses were breached on Monday morning local time and water has begun to flow into the park threatening the company’s facilities there.

All WD employees in Thailand remain safe.

The company’s other facilities in Malaysia, Singapore and the U.S. are fully operational.

The company now expects that the flooding of its Thailand facilities, combined with flood damage to the company’s supply chain in Thailand, will have significant impact on the company’s overall operations and its ability to meet customer demand for its products in the December quarter.

The company will provide further updates on the situation on its investment community conference call on Wednesday, October 19, 2011.


The HDD industry never encounters such a natural disaster in its history. Earthquakes in Japan had a minor effect compared to what's happening in Thailand.

                                     WD factory
           in Bang Pa-in Industrial Park in September 2008

                     Aerial photo shows flooded factories
               at Bang Pa-in Industrial Estate in Ayutthaya

                            (Source: Bangkok Post)

All HDD manufacturers - but Samsung - and a lot of components' makers are affected and it's also a drama for their hundreds of thousands of employees. 25% of all HDD assembly facilities are located in Thailand.

WD, with both plants about 27 miles North of Bangkok and 37,000 workers, is especially hurt, but also Seagate (significant supply chain disruption), Toshiba (HDD assembly), Hutchinson (suspensions for hard drives), as well as chip manufacturers ON Semiconductor (power transistors for disk head positioners) and Microsemi (converters). And we have no news of Asahi Glass and Hoya in disk media manufacturing, as well as Minebea in motors for HDDs.

For the others:

Furukawa, in disk media, stated: "Four production facilities at the Rojana Industrial Park in Ayutthaya have sustained damage from inundation and have suspended operations."

At TDK and Magnecomp, "the operation of both the Wangnoi Plant of TDK Thailand Co., Ltd. and the Wangnoi Plant of Magnecomp Precision Technology Public Co., Ltd. are suspended from October 13th for the sake of ensuring safety of the employees although both plants suffered no damage to their facilities or equipment," and "the Rojana Plant of TDK Thailand Co., Ltd. and the Rojana Plant of Magnecomp Precision Technology Public Co., Ltd. are still unknown, for access to both plants are still not possible. Due to the flood, both plants are inundated and operation is suspended since October 9th."

Operation of TDK with 1,600 people in Rojana Industrial Park for HDD motors has been suspended since October 7.

For Nidec (HDD motors) in Rojana and Ayutthaya, factories have been partially or totally inundated and people evacuated and/or activity suspended.

Furthermore, transportation and utilities have also been affected in the country.

Obviously, this drama will boost the prices of the disk drives and lead to shortages for PC companies in the next months, as WD is the number one manufacturer in the world in units shipped and producing 60% of its units in Thailand, mainly for PCs. Competitors Seagate, Hitachi GST, Samsung and Toshiba could take advantage of the situation.

In a recent note, Fang Zhang, storage analyst at IHS, wrote: "Thailand, the world's second largest exporter of HDD behind China, has experienced its worst floods in more than 50 years, potentially leading to a shortage of HDD supplies during the current quarter that may last into the first quarter of 2012. While it is too early to gauge the extent of the impact of the floods, HDD supplies are likely to be constrained throughout the fourth quarter. The current IHS HDD forecast, developed before the disaster, calls for production of 176.2 million hard drives during the fourth quarter, representing 25.9% of annual manufacturing in 2011. IHS likely will downgrade its fourth-quarter production forecast in light of the impact of the disaster."

He also said that Toshiba was affected:" Western Digital Corp. and Toshiba Corp. have temporarily halted production of HDDs in Thailand, impacting a major portion of global hard drive manufacturing. The companies operate HDD assembly facilities in Pathum Thani province near Bangkok. Toshiba employs about 3,900 workers in Thailand, and approximately 50% of the company's manufacturing capacity is in the country. In the second quarter, Toshiba was the No. 4-ranked HDD supplier, with 17.8 million units and a 10.6% share."

The Bangkok Post also wrote that Gartner forecasts that supply disruptions caused by the Thai floods will trim HDD shipments worldwide by at least 10 million units from the previous fourth-quarter target of 180 million. The full-year estimate had been 683 million units.

Will it impact current operations consolidating the industry (WD and Seagate to acquire Hitachi GST and Samsung HDD business respectively)? As there are only five HDD makers, the manufacturing facilities are concentrated in few huge component and assembly plants, about all of them in China, Malaysia, Philippines, Singapore and Thailand. The consolidation in the industry with only three makers remaining is more risky in case of other disasters like these Thailand floods.

WD's shares are falling and the company needs to be in good financial health to pay as much as $4.3 billion to get HGST.

Locations of HDD and Components
Manufacturing Facilities in Thailand

Hitachi GST

  • Prachinburi (HDD assembly)
  • Chonburi through sub-contract manufacturer Saha Union (HDD assembly)
  • Sarawak (disk media)


  • Korat (HDD assembly and disk heads)
  • Korat (disk heads)


  • Pathumtani (HDD assembly)


  • Navanakorn (HDD assembly)
  • Bang-pa In (HDD assembly and disk heads)

Asahi Glass

  • Bangkok (disk media)


  • Rojana (disk media)


  • Changmai (disk media)


  • Rojana (disk media)


  • Rojana (motors)


  • Rojana (motors)
  • Ayutthaya (motors)


  • Ayutthaya (suspensions)


  • Rojana (suspensions)
Min Aik
  • Ayutthaya (HDD components)
Cal-Comp Electronics