Tech firms in Thailand need 2-6 months to recover: Industry
BANGKOK, Nov 15 – Thailand’s flood-hit electronics sector is expected to take two to six months to resume operations now that floodwater in central Ayutthaya province is receding, the head of a private industry group said today.
The flooding in central provinces of Thailand should continue to affect the industry’s supply chain until early next year, Sampan Silapanad, president of the Electronics and Computer Employers’ Association, said.
“The earliest should be two months from November. That means some factories may be able to restart part of their flood-hit plants in early January,” he said, adding about 40 per cent of the association’s 47 corporate members were affected by floods.
The computer sector would be hardest hit by supply disruption as the industry relied on parts from Thai suppliers, Sampan said, adding it was difficult to estimate the exact level of damages.
“The impact will be huge, but it will not be the same for each company and the figures keep changing,” he said, without naming specific companies.
Thailand is a big Southeast Asian manufacturing base for hard disk drives, with Seagate Technology, Hitachi Global Storage Technologies and Western Digital all having production plants there.
Western Digital has production facilities in Bang Pa-in Industrial Park in Ayutthaya and Nava Nakorn Industrial Park in Pathum Thani province, both of which have been hit by floods.
Seagate, which competes with Western Digital for the title of the world’s largest maker of hard drives, has two plants in Samutprakarn and Nakornratchasima provinces, away from the flooding in central provinces and northern Bangkok.
Earlier this month, Seagate lowered its shipments estimate for the current quarter as the floods had squeezed capacity.
With operations disrupted at more than a dozen hard disk drive factories, damage to the industry is significant and this will have a direct impact on worldwide PC shipments through the first half of 2012, according to technology research firm IDC.
In the first half of 2011, Thailand accounted for 40-45 per cent of worldwide hard disk drive production, IDC said in a recent report.
As of early November, nearly half of this capacity was directly affected by flooding and a significant supply shortage was expected by mid-November, continuing into the first quarter of 2012, it said.
The Thai electronics sector was already suffering from a dip in sales due to softer global demand and economic uncertainty. Many analysts have downgraded the sector as the supply disruption should show through in fourth-quarter earnings and 2012 looks like being a difficult year. – Reuters