Friday, November 18, 2011

How will the disk shortage affect you?

Summary: Massive flooding has shut down disk giant Western Digital’s Thai plant. Asustek could run out of disks by the end of this month; Lenovo and Apple have issued warnings. That’s just the tip of the iceberg.

We heard a similar story with the Japan earthquake/tsunami/meltdown disaster: plants offline; component shortages; widespread disruptions forecast. But somehow things have kept going for most vendors with the exception of Lexus, Toyota and Honda.

What’s real
There’s 4 feet of water in the WD plant. Even after the flood waters recede a substantial clean up is required: one analyst forecast 56 days of downtime.

That plant produces about half of WDs disks. WD produces about half of the world’s disks, so worst case we’re looking at a 25-30% reduction in global disk supply over the next 2-3 months.

Global production is ≈50 million drives a month, so the shortfall could be 30-50 million drives. Yeah, that would hurt.

Disk component suppliers have also been affected, but there’s less visibility into their condition. Worst-case so far: the vendor who makes most of the world’s spindle motors has a flooded plant.

But shortages of other critical components are possible, and could affect all vendors, not just WD. OTOH, other plants could ramp up to fill the void - and it would be in their financial interest to do so.

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