WD May Have Rough December Due to Flooding
WD may not be able to meet customer demand for its products in the December quarter.
Western Digital said on Monday that it's facing a weak December due to the Thailand floods. According to the company, rising water penetrated the Bang Pa-in Industrial Park's "flood defenses" over the weekend and entered WD's manufacturing facilities, submerging some of the equipment.
To make matters worse, water infiltrated the location of the company's other manufacturing plant in Thailand, Navanakorn Industrial Park, on Monday morning. So far there's no indication that the water has entered the facilities, and the company currently reports that all employees in Thailand remain safe.
"The company now expects that the flooding of its Thailand facilities, combined with flood damage to the company's supply chain in Thailand, will have significant impact on the company's overall operations and its ability to meet customer demand for its products in the December quarter," WD said on Monday.
WD's other facilities in Malaysia, Singapore and the U.S. are fully operational. The hard drive manufacturer said that further updates on the Thailand situation will be provided during its investment community conference call on Wednesday, October 19, 2011.
Western Digital is just one of many affected by the floods in Thailand including Seagate, chip makers ON Semiconductor and Microsemi Corp. Analysts predict that the predicted supply constraints may have a significant impact on the broader computer industry, leading to higher prices and a shorter list of components later this year or early next year.
"If this lingers on more than a quarter, there could be outright product not available," Needham analyst Richard Kugele said. "Right now there's definitely pretty dramatic shortages and pricing is increasing significantly."
Last week Seagate said that its Thailand-based facilities are fully operational, and there are no logistical issues with employees reaching its factories.
"The hard disk drive component supply chain is being disrupted and it is expected that certain components in the supply chain will be constrained," the company added. "Given the volatility of the situation it is unclear what the magnitude of the supply chain disruption will be to Seagate’s hard disk drive output from its Thailand operations."
Seagate also said last week that it anticipates hard drive supply will be constrained throughout the current quarter. But the company also pointed out that the situation is dynamic, and circumstances can change quickly and frequently. That said, the company plans to reveal more on its quarterly conference call on Thursday, October 20, 2011.
"This devastating natural disaster has tragically taken hundreds of lives and displaced many families," Seagate said. "At this time, Seagate reports that all of its employees in the region are safe.