Thai floods to cost WD up to $275m this quarter

Western Digital resumes production at one hard drive plant, but warns of disruption until March and beyond

Tags: ThailandWestern Digital Corporation
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Thai floods to cost WD up to $275m this quarter A number of manufacturers have been hit by flooding in Thailand. (ITP Images)
By  Mark Sutton Published  December 6, 2011

Western Digital has warned that flooding in Thailand will likely cost the company $225m to $275m in the December quarter, due to damages to its facilities and business interruption.

The company expects to file a property damage claim of at least $50 million and an additional claim for business interruption during the December quarter, but it expects operations to be impacted into the first calendar quarter of next year and beyond.

In a company statement, Western Digital said that it expects that only 120 million hard drives will ship in this quarter, across the industry, short of demand of 170m to 190m units.

The company has been able to resume hard drive production at one plant in Bang Pa-in (BPI) on 30th November, one week sooner than expected. The plant had been under six feet water from 15th October to 17th November.

The company's other Thailand hard drive facilities at Navanakorn are still submerged, but Western Digital expects to begin production in a new WD slider fab location in Penang, Malaysia, and at the BPI site, in the first quarter of next year.

Thailand accounts for some 40% of global hard drive production, and flooding hit several facilities belonging to Western Digital, Toshiba and other suppliers, although Seagate, which also has production facilities in the country, escaped any damage to its plants.

"The passion, perseverance, ingenuity and execution exhibited by the WD team has been extraordinary and enabled us to make substantial progress in partially restoring our operations in Thailand, well in advance of our earliest expectations when the floods hit," said John Coyne, president and chief executive officer of WD. "Much work remains to be done but we couldn't be more pleased with the effort and results thus far, including tremendous support from our supply partners and strategic customers."

2114 days ago
Vinod Mehra

The flood in Thailand that produces over 40% of the HD production not only reflects losses to the manufacture but a big financial setback to the PCs and server manufacturer due to the constrained availability.
This is the right opporunity for alternate technologies to increase their market share and end users mindset.

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