— I’ve been so busy getting my little movie ready for theaters I’ve hardly had a chance to write. So for a change here’s something not about Steve Jobs.
Thailand is flooded, as we’ve all read, and the Thai hard disk industry has been adversely affected. But for all the doom-and-gloom stories I’ve read so far there hasn’t been much attempt at extrapolating the impact of these events past the basic idea that there will be drive shortages and prices will go up for awhile. The real story is way bigger than that.
The industrial park that’s sitting underwater still in Thailand will be out of action for at least four months, I’m told, and possibly as long as 12 months. And what happens then? Why another monsoon, of course! The flooded industrial park, built in an old rice paddy on a historic flood plain with little added drainage will go under water during the next big storm, too.
The hard disks manufactured in the flooded region are nearly all 3.5-inch drives, so those will be most immediately affected. Since 2.5-inch drives are in ascendancy with 1.8-inch almost out of business and 3.5-inch in decline, the global product mix is likely to change even more, with 3.5-inch drives possibly reaching end-of-life earlier than expected.
But wait, there’s more! Among the Thai plants currently under water is a Western Digital factory that makes 80 percent of hard drive
stepper spindle motors in the world. So while the 3.5-inch drive supply will be most immediately affected, 30-60 days later every other type of drive will be in as short supply.
Who are the winners and losers here? The winners are clearly makers of Solid State Drives that have no stepper motors and come nowhere near Thailand. The losers are the hard drive companies, the PC companies like HP, Lenovo, and all the rest that will have to pay higher prices for drives, but especially Intel because that company is a proxy for the PC industry as a whole. If PC sales go down CPU sales will go down too and Intel will be hurt proportionally more than the companies it supplies.
All Intel can do with these lemons, it seems to me, is make lemonade. Intel is in the SSD business already so I’d expect the company to lean on that division to help the company overall. In fact I’d look for Intel to throw lots more money into SSD production, accelerating the trend away from hard drives in order to keep its processor business thriving.
It’s either that or learn to make stepper motors.