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Thai floods cause chain reaction in market supply

Posted: 26 Oct 2011 ?? ?Print Version ?Bookmark and Share

Keywords:Thailand foods? HDD supply? PC market?

Lele added that PC makers will have an average of four to six weeks of inventory, but will feel the effects after that is gone. "From that context, the issue will start hitting these companies sometime toward the end of November and December, which for them are also key months because of the holiday season."

John Carvill, a spokesperson from Intel Corp, said: "The PC supply chain has proven to be very resilient, as most recently demonstrated in the response to the earthquake in Japan." The chip maker says it is keeping an eye on a "dynamic" situation, but expects existing supply and unaffected sources will keep the PC industry supplied. If manufacturers will build fewer PCs, Intel's processor sales will also be affected.

Apple Inc.'s CEO Tim Cook told analysts this week that he expects an industry shortage of disk drives.

Dell Inc. said that the floods would have little impact on its quarter ending this month. However, the company did not say how it expected to be impacted beyond then.

Pegatron Corp., Asustek Computer's main contract manufacturer, doesn't see a problem for the next six to eight weeks as makers have inventory. However, after that period, it would depend on how fast things in Thailand recover. The company's CFO, Charles Lin, said that there's a difference between the situation in Thailand and the aftermath of Japan's March earthquake, which also disrupted the supply for components. "The concentration of some component manufacturing there was very high, but Thailand only makes up about a quarter of global hard disk production, so if plants elsewhere can ramp up, the effect this time may be less than that after the Japan quake," he said.

"Because notebooks all need hard disks, there will be an impact on the whole IT industry in November, December and into January, and this is a negative factor for DRAMs," Pei Lin Pai, Nanya Technology Corp.'s vice president, told reporters. Nanya is Taiwan's No. 2 DRAM chip maker.

South Korea's Hynix Semiconductor Inc., the world's No. 2 computer chip maker, said it was not greatly affected by the floods, given the current inventory levels at HDD makers and PC vendors.

"It will be more for the PC makers to absorb the costs because it is highly unlikely that they pass it on to the customer. They will be under tremendous pressure to absorb the additional costs," Lele said.


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