The devastating floods that have hit Thailand will likely result in significant hard disk drive shortages by mid-November, and the industry might not see a full recovery until late next year.
In a worst-case scenario, PC shipments could be down 20 percent in the first quarter of 2012 compared to previous estimates, according to a new report from IDC.
Thailand produced 40 to 45 percent of the world's hard disk drives (HDD) in the first half of 2011, but by early November, nearly half of the country's HDD capacity was directly impacted by the floods, IDC said. Some assembly and component factories are under water, while others are hampered by shutdowns due to poor access and power outages.
A full analysis will be required after the floodwaters recede, but IDC already believes that an early 2012 shortage is inevitable.
"While IDC believes HDD industry participants will recover and restore HDD production capacity relatively quickly, HDD supply will remain constrained for an extended period of time," the firm said.
The fourth quarter, and the holiday season, will likely emerge relatively unscathed since most PC production has been completed or can be finished with existing HDD inventories.
But PC vendors can expect higher prices as manufacturers scramble to find components, pay for expedited shipping, and shift to new locations.
At this point, IDC expects the HDD market to start recovering in the first quarter, with HDD pricing stabilizing by June and running close to normal by the second half of 2012.
In the meantime, small PC makers and vendors could be affected most.
"In response to the crisis, priority will be given to the large PC manufacturers that drive HDD shipment volumes as well as to the high-margin products used in enterprise servers and storage," said John Rydning, IDC's research vice president for HDD and semiconductors. "But the HDD vendors can't neglect their smaller customers, whose business will continue to be important once capacity is fully restored. Some interesting production and partnering arrangements with customers can be expected as HDD vendors scramble to bring production back up while simultaneously angling for a strategic advantage."
IDC predicted that lower-priced products will suffer the most, including netbooks, emerging markets, and entry-level consumer PCs.
In late October, Western Digital, Seagate, and Apple reported a severe impact from the floods, as did camera makers Sony and Nikon, to a lesser extent.
For more, see Hard Disk Market Under Pressure After Thai Flooding and Thailand Flooding Threatens PC Supply.