Driving disk prices in 2012
The extensive flooding in Thailand has gone largely unreported in the UK news. However, as Thailand is one of the major disk drive producing countries, it could impact technology prices significantly in 2012.
Thailand is a constitutional monarchy lying at the heart of the Indo-China peninsula, approximately twice the size of the United Kingdom and with a slightly larger population (67 million). It suffered some flooding in March and April, but the most severe floods came with the monsoon season starting in June and affected the south of the country, including the capital, Bangkok.
This is flooding on a massive scale. As many as 13 million people and seven of Thailand's major industrial areas have been severely affected, with flood depths of 10 feet being reported. Whilst Bangkok is back in business, even as late as the start of December, some areas of the country were still under six foot of flood water. The World Bank has estimated the financial cost of this disaster at 45 billion US dollars.
Many major disk manufacturers have fabrication plants in Thailand. In October it was reported on the BBC World Service that a factory which supplied drives to the likes of HP had been evacuated and had three foot of flood water washing through the plant. This doesn't just halt production, it terminates it. The highly specialised equipment used to form the disk drives will have been ruined beyond repair and rebuilding and refitting the factory will take many months and huge capital investment. It could be well into 2013 before such plants are operating normally again. Seagate's disk factory in the north east of the country escaped the direct effect of the floods but its distribution chain is disrupted. Seagate has also announced that it is spending around 30 million dollars to bring a disk plant online in the south east of the country.
As a measure of the impact of these floods on the rest of the world, disk production is down by over 50% and the drive shortfall in the last quarter of 2011 is expected to be about 70 million units down from expected. As a result, the price of hard disk storage has already risen by between 20% and 30% in the last few months. This is at a time when the world has a voracious appetite for disk storage, not only in the desktop PC, but also in some high end phones, pads, digital video cameras and TV recorders, and the many servers which drive the internet.
19th December 2011
This article comes from the SKILLZONE email newsletter, published monthly since January 2008, and covering topics related to technology and the internet. All articles and artwork in the SKILLZONE newsletter are orignal content.