Hard Drive Shortages – Now It’s Serious

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The floods on Thailand are now expected to bring seriously reduced shipping of PCs, according to industry analysts. Previous reports of a few opportunistic retailers are now spreading right across the PC supply chain, after production was interrupted at more than a dozen hard drive plants. Thailand produces more than 40% of hard drvies sold worldwide. The shortage will not be obvious until early 2012, as most drives currently on sale and in inventories were produced before the floods hit.

Normal operation will not be seen before at least mid-2012, and analysten expect an 8.5% decrease in PC sales in Q1, but retailers are expected to factor in shortages when marking ua current stocks. Knock-on effects are calculated to reduce Microsoft’s profits as lass people buy Windows PCs. Investment bank Goldman Sachs is now predicting a 3% global fall in PC demand against previous expectations of 3% growth in the market.

Costs will rise for retailers too, manufacturers pass on the costs of higher-priced components for hard drives and the cost of moving production to new sites. Because manufactureres must give priority to large PC manufacturers (to keep contracts and so on) and enterprise server suppliers, low-margin products such as netbooks, entry-level machines and stand-alone drivers will be pushed upwards.

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