IHS: Thai floods drown electronics sector

The tragedy is not contained inThailand, but the conditions have also hit the electronics industry, affecting key end products of electronic parts and subsystems. Sectors that are heavily affected are automobiles, car components, cameras, hard drives, and analog and discrete semiconductors.

Disruptions in the supply chain are indirectly hurting productions of other devices and systems, including notebook Pcs, DRAM, cameras and set-top boxes, according to market watcher IHS.

Beyond Thailand itself, the worst-impacted country is Japan, which maintains extensive manufacturing operations in areas affected by the disaster.

As a result of the flooding, the HDD industry in the fourth quarter will suffer its worst downturn in three years. HDD shipments in the fourth quarter will decline to 125 million units, down 27.7 percent from 173 million in the third quarter. The drop is the largest sequential decrease on a percentage basis since the fourth quarter of 2008 when shipments fell 21.2 percent during the worst point of the last electronics downturn. IHS estimates that 30 percent of HDD production in the fourth quarter this year will be lost because of the disaster. This will result in a significant shortage of HDDs.

Because of the shortage, HDD inventories will be depleted and will cause average HDD pricing to rise by 10 percent in the fourth quarter compared to the third.

The downturn will be spurred by production disruptions and stoppages at the manufacturing operations of some of the world's largest HDD makers—namely Western Digital Corp. and Toshiba Corp.—as well at suppliers of key components. Thailand is the world's second-largest producer of HDDs after China and is a major supplier of hard drive parts.

Given the direct impact of the disaster on its operations, Western Digital is likely to lose its status as the world's largest shipper of HDDs, with its rank expected to fall two positions to third in the fourth quarter, down from first place in the third quarter. Toshiba's rank could fall to fourth place, down from fifth.

1???2??