Western Digital extends suspension of operations in Thailand

Competitor Seagate has warned of component shortages because of the floods

Western Digital said its primary manufacturing facility in Thailand was flooded over the weekend, with its secondary site also at risk, raising the possibility of a global shortage of hard disk drives (HDD) in the current quarter.

The company said Monday that it has decided to extend the suspension of its operations in the country announced last week.

Flooding has killed over 290 people in Thailand since July, according to reports.

Seagate Technology, another disk drive maker with operations in Thailand, said last week that disruption in the supply of components could lead to constrained supply of drives in the fourth quarter, although its factories in the country were in operation. An update on the situation is expected from the company on Thursday.

The floods in Thailand, the second largest exporter of hard disk drives after China, could potentially lead to a shortage of HDD supplies during the current quarter that may last into the first quarter of 2012, said research firm IHS iSuppli on Monday.

Besides Western Digital, the largest maker of hard disk drives by volume by iSuppli estimates, Toshiba has also halted production in Thailand. The Japanese company has extended closure of its semiconductor and storage devices factories in Thailand, with a review expected later on Tuesday.

Western Digital said on Monday that rising water penetrated the Bang Pa-in Industrial Park flood defenses over the weekend, inundating the company's manufacturing facilities there, and submerging some equipment. At the other manufacturing location in Navanakorn Industrial Park, the park flood defenses were breached on Monday morning local time, and water had begun to flow into the park threatening the company's facilities there, it said.

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

It said it will provide further updates on the situation during an investor call on Wednesday. In the quarter to July 1, Western Digital shipped about 54 million hard drives from its facilities in Thailand and Malaysia, with about 60 percent coming from its sites in Thailand.

A number of electronics companies have halted production in Thailand, including Nidec which according to iSuppli supplies more than 70 percent of all global HDD motors, and is a supplier to major HDD manufacturers like Western Digital, Seagate, Hitachi Global Storage Technologies, Toshiba and Samsung.

Nidec said in a regulatory filing last week that it temporarily suspended operations at factories in Thailand making HDD motors and motor components.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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John Ribeiro

IDG News Service
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