Q1 PC Shortfall Expected Due To Thai Floods

The true cost of the extensive flooding in Thailand is slowly being tallied up, with market research firm IHS iSuppli warning that the shortage of hard disk drives will limit the number of PCs that will ship in the first quarter of 2012.

IHS iSuppli analysts are cutting their first-quarter PC forecast by 3.8 million units – to 84.2 million – and reducing their full-year growth numbers for 2012, saying worldwide PC shipments for the entire year will rise 6.8 percent over 2011, down from the 9.5 percent growth the firm forecasted in August.

Notebook Impact

Getting hit the hardest will be notebooks, which are the systems most impacted by the HDD shortages, the IHS iSuppli analysts said in a report 8 December. They are now predicting that notebook shipments will grow 10.1 percent year-over-year in the first-quarter 2012, down from the 13.8 percent they initially predicted.

“The PC supply chain says it has sufficient HDD inventory for the fourth quarter of 2011,” Matthew Wilkins, senior principal analyst of compute platforms for IHS iSuppli, said in a statement. “However, those stockpiles will run out in the first quarter of 2012, impacting PC production during that period.”

The monsoon season hit Thailand early and hard this year, causing flooding that started in October and lasted weeks. The floods impacted the HDD industry the hardest – Thailand assembles about 70 percent of the world’s hard disk drives.

The HDD shortage is not the only challenge facing the PC industry, IHS iSuppli analysts said. Continued weakening in demand for PCs – thanks in part to the rise in popularity of tablets – and the difficult global economic situation also are contributing. However, the flooding is having a particularly strong impact. Total unit PC shipments in 2012 are now expected to be 376 million, down from the firm’s previous forecast of 399 million.

Long Term Impact

The analysts expect the HDD supply issues to improve in the first quarter, with major suppliers already moving production to locations outside of Thailand.

However, shortfalls will continue, with supply not beginning to meet demand until the end of the third quarter in 2012, they said. Meanwhile, PC shipments should rebound in the second half of the year, though not enough to keep the analysts from reducing their yearlong forecast.

However, when the HDD supplies do rebound, they will swing back hard, the IHS iSuppli analysts said. Once the Thailand production facilities get back up to full speed, the output from those combined with the supplies from the facilities outside of the country could result in an excess of supply, they said.