Thai floods to pull down global PC sales by double-digits ~ ZagaTech Philippines

The massive flooding in Thailand is expected to cut global sales of personal computers in the next 12 months, Fitch Ratings said.

According to the credit ratings agency, the major disruption caused by the floods in Thailand could affect some of Asia’s biggest technology firms, as Fitch tech analyst Kevin Chang estimates that the disaster could pull down 12 percent to 14 percent of total worldwide sales compared with pre-flood expectations.

“This implies negative shipment growth for the PC industry of around 8 percent in 2012, given that we were previously expecting positive 5 percent,” Chang said.

About 40 percent to 45 percent of the global HDD production is disrupted by the flood.

The analyst estimates that it would take at least 5 months for the hard disk drive (HDD) production in Thailand to return to normal capacity since production facilities suffered significant flood damage. It will take longer as it takes six to nine months to repair and reinstall production line equipment after the floods recede.

Chang said that about 60 percent of Western Digital’s total HDD capacity is based in flood-affected regions in Thailand, while 50 percent of Toshiba’s total HDD capacity and 25 percent of Hitachi’s GST’s total capacity have also been hit. Seagate’s production levels have been cut by 15 percent since most of its component suppliers are underwater.

Prior to the floods, the Fitch analyst estimated that PC sales would have rebounded by 5 percent next year due to the demand for ‘ultrabooks’ and the release of Windows 8.

“But now with major PC manufacturers still in the dark as to when sufficient HDDs will be available, and HDD providers themselves placing greater priority on meeting customer demand for HDDs used in higher margin enterprise products, such as servers and storage, at the expense of lower-margin PC HDDs, it is quite difficult to forecast with any certainty PC unit sales for 2012,” Chang said.

The Thailand disaster’s “most severe” impact on PC shipment would be felt during the first quarter of next year then it would gradually ease in the coming quarters since manufacturers are more likely to hike production output in China and Malaysia. Moreover, “a greater number” of PCs may be shipped with NAND flash-based solid-state drive (SSD) instead of HDDs.

This would then increase the demand for SSD drives, allowing sales to more than double next year, and benefit Hynix, Samsung and Toshiba. Higher demand could result to higher economies of scale and cost reductions. Chang said that before the Thailand floods, SSDs were 45 times more expensive than HDDs on cost per GB basis, or for the price of a 64-GB SSD, one could buy a 3TB HDD.

“If the result of the flood means that the price differential declines to the US$150-200 range, and the PC companies re-align their promotions more towards notebooks with SSDs, then it stands to reason that more consumers and corporations will opt for the SSD drives—particularly given the speed advantages associated with SSD drives and that 240GB is viewed as more than sufficient capacity to handle the average user’s needs,” Chang said.

----credits to InterAksyon.com