Hard-disk drive industry hit

Hard-disk drive industry hit

After floods inundate hard-disk drive factories, producers may move to other countries to avoid a global supply shortage.

sandbags

Waters broke through and flooded Navanakorn Industrial estate today (See breaking news 1:16pm).

Navanakorn is home to hard disk drive manufacturers such as Western Digital and Toshiba.

Will these hard drive manufacturers move production to other countries? And, if so, for how long? These are the questions that people are asking and that are discussed in this article.

Read previous Bangkok Post articles on Thailand hard disk drive industry (See #1, #2 and #3).

In photo above a high embankment of sandbags erected to secure the Navanakorn industrial estate in Pathum Thani before water broke through earlier today (Photo by: KOSOL NAKACHOL)

Click button to listen to hard Supply Chain Disruption to download

FLOODING: HDD firms ponder shift, Disruptions of supply chain looms large by Nareerat Wiriyapong


Hard-disk drive (HDD) manufacturers are considering a temporary move outside the country due to concerns that production disruptions due to the recent floods may otherwise lead to a global supply shortage.

California-based Western Digital, which supplies one-third of HDDs in the world, last Wednesday suspended operations at its two plants in Ayutthaya's Bang Pa-in Industrial Estate and Pathum Thani's Navanakorn Industrial Estate to protect its employees and its facilities and equipment against water inundation.

"Production of hard drives in its facilities in Thailand will be constrained in the current quarter due to the local severe flooding," it said in a statement.

With the world's top four HDD manufacturers operating in Thailand, the country handles 60% of the global production. Japan's Nidec, which supplies 70% of the world's spindle motors for HDDs, also operates here.

"Western Digital is of course looking at the possibility of shifting some production to Malaysia to offset the decreased volume in Thailand," said an industry executive.

While the factories of California-based Seagate Technology Inc and Japan's Hitachi Global Storage Technologies (Hitachi GST) are still running, both have also highlighted potential problems.

"Certainly, disruptions in the local supply chain will occur, similar to what was faced in the wake of Japan's tsunami earlier this year. Sooner or later, it's going to happen," said another industry executive.

Hitachi executives will fly to Thailand this week to review the situation.

The company's plant in Prachin Buri province has not been affected by the flooding that has forced the suspension of six of Nidec's seven plants in Thailand including in the Rojana Industrial Park

Other HDD component makers operating in Rojana include Minebea, a secondary supplier of HDD spindle motors; suspension makers Hutchinson Technology and Magnecomp Precision Technology; TDK, which processes and manufactures rare-earth metals, recording media and sensors; and Furukawa, a supplier of coating materials for HDD media.

"I'm sure these component makers will look at moving production to other countries, and HDD companies may also do so," said the source.

Apart from Thailand, HDD makers have manufacturing facilities in Malaysia, Singapore and the Philippines. Hitachi GST, which ranks third globally, also operates in China.

Seagate said that its factories in Samut Prakan and Nakhon Ratchasima provinces remained operational, and there are no logistical issues with employees reaching its factories.

"However, the HDD component supply chain has been disrupted, and it is expected that certain components in the supply chain will become constrained. Given the volatility of the situation, it is unclear what the magnitude of the supply chain disruption will be to Seagate's HDD output from its Thailand operations," it said in a statement.

As a result of the disruption caused by the floods, Seagate anticipates hard drive supply will be constrained throughout the current quarter.

Japan's Toshiba also manufactures HDDs locally, in Navanakorn. 

Gartner, the international IT research firm, forecasts that supply disruptions caused by the Thai floods will trim HDD shipments worldwide by at least 10 million units from the previous fourth-quarter target of 180 million. The full-year estimate had been 683 million units.

(Source: Bangkok Post, FLOODING, HDD firms ponder shift, Disruptions of supply chain looms large, 17/10/2011, Nareerat Wiriyapong, link

Supply Chain Disruption Vocabulary

hard disk drive (HDD) -
the device used to store data on every computer, also called just "hard disk" (See Wikipedia)

hard-disk drive (HDD) manufacturers - companies that produce hard drives for computers

component - a part which combines with other parts to form something bigger ส่วนประกอบ,ส่วนเสริม
HDD component makers - companies that make parts used to make hard disk drives (HDDs)

supply chain - the series of steps of producing goods that are used to produce other goods (parts, components, intermediate goods) that are included in other goods, and so on, until a final good is produced and sold in stores to consumers (See Wikipedia)

HDD component supply chain
HDD component supply chain has been disrupted  

disruption - prevented from operating normally; a situation in which something cannot continue because of a problem การขัดขวาง, การหยุดชะงัก
disuptions of supply chain
disruptions in the local supply chain

supply disruptions
supply disruptions caused by the Thai floods

concerns - worries ความกังวล
concerns that production disruptions

disrupted - interrupted and prevented from continuing smoothly by creating problems ขัดขวาง

ponder - to think carefully about something, especially for a noticeable length of time
shift - to transfer; to move from one place to another เคลื่อนย้าย
ponder shift -
thinking about moving production to another country

loom -
when some bad event may happen soon (example: As the economy plunges into recession, layoffs loom.)
looms large - 
very likely that a bad event will happen

temporary
- done or used for only a limited period of time, i.e., not permanent ชั่วคราว
temporary move outside the country

global - throughout the world, all over the world, including the whole world  ทั่วโลก ทั้งโลก 
global supply shortage - not enough all over the world (worldwide)

suspended - stopped for a period of time (temporarily)
plants - factories
suspended operations at its two plants - stopped production at its factories temporarily (for a short time)

facilities - the buildings, equipment and services provided for a particular purpose (for example, athletics facilities) สิ่งอำนวยความสะดวก สถานที่และสิ่งอำนวยความสะดวก
manufacturing facilities - factories (with the equipment inside)

inundation - flooding น้ำท่วม
water inundation - flooding

protect its employees and its facilities and equipment against water inundation

constrained - limited (cannot go or move beyond a certain value)
production constrained - the amount the company produces is limited (prevented from producing more)

current - now; of the present time ปัจจุบัน
quarter - three months of the year on a company or government calendar: 1st, 2nd, 3rd, and 4th quarters
the current quarter -

looking at the possibility of - checking and evaluating an possible decision (option, choice) before making the decision

offset - reduce by moving in the opposite direction, counter-balance, compensate in the opposite direction ("x offsets y" means "x reduces the effect of y"), make up for (profits from the manufacturing business offset losses from the retail business) (See glossary)
volume - the quantity or amount of something

looking at the possibility of shifting some production to Malaysia to offset the decreased volume in Thailand

highlighted - stressed; emphasized; made something more noticeable ที่เน้นย้ำ
potential - possible ความเป็นไปได้
highlighted potential problems - made possible problems (that might arise in the future) more noticeable

X in the wake of Y -
X happened after bad event Y, event X happened 
in the wake of Japan's tsunami
- after Japan's tsunami

sooner or later, it's going to happen - it will eventually happen, it will happen for sure (but not sure when)

review the situation - look at the situation carefully (evaluate, assess the situation) before making a decision

suspension - stopping for a period of time (temporarily)
force suspension - they must stop temporarily (necessary, forced, no choice in this matter)
flooding that has forced the suspension
of six of Nidec's seven plant

secondary supplier -
not the main producer and supplier of a goods (supplies parts combined to make the main good) 
spindle - a rod in a machine, other parts turn around this rod
secondary supplier of HDD spindle motors 

suspension -
spring or other devices that make movement smoother (less bumpy, less sudden movement)

rare-earth metals - "a set of seventeen chemical elements in the periodic table, specifically the fifteen lanthanides plus scandium and yttrium. Scandium and yttrium are considered rare earth elements since they tend to occur in the same ore deposits as the lanthanides and exhibit similar chemical properties. Despite their name, rare earth elements (with the exception of the radioactive promethium) are relatively plentiful in the Earth's crust, with cerium being the 25th most abundant element at 68 parts per million (similar to copper). However, because of their geochemical properties, rare earth elements are typically dispersed and not often found in concentrated and economically exploitable forms. The few economically exploitable deposits are known as rare earth minerals.  It was the very scarcity of these minerals (previously called "earths") that led to the term "rare earth". The first such mineral discovered was gadolinite, a compound of cerium, yttrium, iron, silicon and other elements. This mineral was extracted from a mine in the village of Ytterby in Sweden; many of the rare earth elements bear names derived from this location" (See Wikipedia)

media -
computer storage media or computer storage device: flash memory, hard drive, CD, DVD, tape, floppy drive, etc (See Wikipedia)
recording media - same as "computer storage media"
HDD media - hard drive as a "computer storage media"

sensors
- an device (instrument) that measures and provides information

coating -
a thin layer of some substance spread over another substance
coating materials

source
- someone who gives information แหล่งข่าว

globally
- throughout the world ทั่วโลก
ranks third globally - 3rd in the world

operational - working; able to be used; able to work normally ที่สามารถใช้งานได้
factories remained operational

logistics (noun) -
1. the organization of some complicated activity or event (such as moving many people around during flooding); 2. the acticity of transporting goods between factories and stores as well as storing and tracking them along the way
logistical (adjective)
 
issues - subjects that need to be considered ประเด็น
logistical issues - issues related to organizing complicated activities or events

there are no logistical issues with employees reaching its factories

expected
- believe will happen คาดว่า (จะเกิดขึ้น)
expected that certain components in the supply chain will become constrained

volatility - changing suddenly and unexpectedly (bad because it makes it difficult to make decisions) ความไม่แน่นอน
volatility of the situation

magnitude - size or strength, either great or small ขนาด,ความใหญ่,ความสำคัญ; ความรุนแรง
unclear what the magnitude of the supply chain disruption will be

anticipate - believe an event will happen before it actually happens, expect an event to happen
anticipates hard drive supply will be constrained throughout the current quarter

as a result of X, Y anticipates Z
As a result of the disruption caused by the floods, Seagate anticipates hard drive supply will be constrained throughout the current quarter.

Gartner - a US information technology research and advisory firm headquartered in Stamford, Connecticut, United States (See Wikipedia)

forecasts - what experts say will happen in the future คาดการณ์

estimate - to say what you think an amount or value is or will be, either by using available information or by guessing คาดคะเน โดยประมาณ
full-year estimate - what people believe the amount will be for the full year

trim - ตัดบาง cut by a small amount
target - a goal; the amount you are planning to achieve เป้าหมาย

will trim shipments from the previous target

will trim HDD shipments worldwide by at least 10 million units from the previous fourth-quarter target of 180 million

Do you like the content of this article?
COMMENT