Sunday, October 23, 2011

Thailand Floods Create Hard Drive Shortage

There are floods in several parts of the world right now, but it is the floods in Thailand that are likely to slow down the computer industry ever so slightly.

Thailand manufactures a significant share of hard disk drives. More importantly, it is the source for most of the motors used in hard disk drives, and the factories that make the motors may remain closed for the month of November as flood waters recede. This is expected to lead to a temporary jump in prices for add-on hard disk drives and delays of two weeks in deliveries of some new computers.

There are stockpiles of hard disk drives in factories around the world, but no one seems to know how large the inventories are. One estimate is that the computer industry as a whole has a three-week inventory of hard disk drives. With the supply of new drives reduced by more than half for more than a month, shortages will surely occur, although no one can predict exactly where or how long they will last.

Businesses are slow to replace desktop computers anyway, and that is a factor that may alleviate the hard drive shortage. If prices for computers increase temporarily, many large businesses will surely opt to postpone all computer replacements for a month or two until the shortage has passed.