It's hard to believe that the devestating typhoon in Thailand occured last August. Over 30% of the land mass of the country was flooded by the typhoon. What does a flood in Thailand have to do with computers and technology in Ithaca, NY? Thailand produces 25% of the world's complete disk drives and its component parts. Annually, the world production of disk drives for computers, laptops, servers, game consoles and other devices is something over 700 million units, so this is a very significant loss of production.
Since the beginning of November, we have seen a dramatic reduction in the availability and a significant spike in prices of all typesof disk drives. Two major disk drive manufacturers, Western Digital and Seagate both have plants in Thailand along with Hitachi, Samsung and Toshiba. Western Digital's plants have been essentially shut down while Seagate's plants have mostly been spared. Below is an updated statement on the situation that we've received from Seagate. Although Seagate is increasing its production, overall demand is going outstrip worldwide supply by over 60 million units per quarter for at least six to nine months.
This shortage of disk drives is causing us difficulty in obtaining computer products and has dramatically driven up the prices of many server, desktop and notebook computers. Prices have increased as much as $500 per unit for some models so far.
Additionally, because stock is so contrained, our manufacturer and distributer partners are only able to quote us prices that are sometimes good for only a few hours even when stock is available. Under these unusual circumstances we are suggesting to our clients:
- Be very cautious when trying to order any computer product online. Online quoted prices are likely to be incorrect.
- When Computing Center staff quotes a price, it will have an expiration date/time. At this time, we can not extend price quotes past the expiration time.
- Do not expect prices for the same item to be the same from day-to-day or in some cases hour-to-hour.
- Whenever possible, we will work with our clients to find products which are available, although we expect that shortages of popular models will extend well into 2012.
The Computing Center works with the three largest manufactuers of computer products and the three largest distributers of technology in the world. And as always, we will work closely with our clients to get the best computer products available at the best possible pricing, even in this time of great volatility.
As has been widely reported, the severe flooding in Thailand is a tragic situation for families and businesses across the region. To aid in the relief and recovery efforts, Seagate is donating US$1 million across a few key organizations in Thailand.
With regard to Seagate business operations in Thailand, our component and drive assembly factories are operational and accessible. Our production is not constrained by either internal component supply or by our ability to assemble finished products. Rather, we are constrained by the availability of specific externally sourced components. Seagate now expects to ship 41 million to 45 million hard drives in the current quarter, a change from the prior projection of 40 million to 50 million units.
Throughout the entire industry, demand will significantly outstrip supply at least for the December quarter and the supply disruption will continue for multiple quarters. Unconstrained demand was expected to be approximately 180 million units for the December 2011 quarter. It is now expected that industry shipments will be limited to approximately 110 to 120 million units.