January 25, 2012 — The late-2011 flooding in Thailand caused major disruptions in the semiconductor and electronics manufacturing communities, most acutely felt in hard disk drive (HDD) manufacturing. FBR Capital Markets provides this update on Thai HDD production following its meetings at CES.
FBR expects hard disk drive shortages to peak in 2Q12, and likely not be totally resolved until late 2012 or early 2013. That said, most of the hard drive production shortfall impacts should be felt in 1Q12 and early 2Q12.
Western Digital has made progress in restoring HDD production, saying that capacity will reach pre-flood levels in calendar 3Q12. Western Digital believes that the HDD supply chain (including OEMs, distributors, and retail) will not be fully replenished until 1H13. Broad-based component shortages from this natural disaster should impact all HDD suppliers.
Quarter by quarter:
4Q11: 100 million hard disk drives will be produced, about 75 million hard drives short of demand.
1Q12: HDD production can ramp to 132 million units, 3 million units worse than FBR’s prior estimate owing to a slightly lower shipment estimate from Western Digital. This number is 33 million units short of demand, and channel inventory will be completely drained.
2Q12: Production nearly catches up with demand. 5 million to 10 million unit HDD shortfall; total cumulative HDD device shortfall at 52 million units.
3Q12 + 4Q12: HDD production should exceed demand with channel refill occurring. 16 million excess drives should be produced in 3Q12 and 27 million in 4Q12. The shortfall will be reduced to 36 million (Q3) and 9 million units by Q4.
Table. Hard Disk Drive Sector Impacts from Thai Flood
|Western Digital||Samsung||Toshiba||Hitachi Data
|3Q11 HDD Share||33%||9%||10%||17%||31%||100%|
|4Q11e HDD TAM (pre flood)||57.8||15.8||17.5||29.8||54.3||175.0|
|4Q11e HDD Production||19.6||11.5||12.3||20.8||36.2||100.4|
|4Q11 HDD Production Surplus / (Shortfall)||(38.2)||(4.3)||(5.3)||(8.9)||(18.0)||(74.6)|
|Inventory Units Available||63.7|
|4Q11e HDD Device Surplus / (Shortfall)||(10.9)|
|1Q12e HDD TAM (Mu)||54.4||14.8||16.5||28.0||51.0||164.7|
|1Q12e HDD Production||33.0||14.0||16.0||25.0||44.0||132.0|
|1Q12 HDD Production Surplus / (Shortfall)||(21.4)||(0.8)||(0.5)||(3.0)||(7.0)||(32.7)|
|Cumulative HDD Shortfall vs. Demand||(43.6)|
|2Q12e HDD TAM (Mu)||56.5||15.4||17.1||29.1||53.0||171.1|
|2Q12e HDD Production||51.0||16.0||18.0||28.0||50.0||163.0|
|2Q12 HDD Production Surplus / (Shortfall)||(5.5)||0.6||0.9||(1.1)||(3.0)||(8.1)|
|2Q12e HDD Device Surplus/(Shortfall)||(51.7)|
|3Q12e HDD TAM (Mu)||59.8||16.3||18.1||30.8||56.2||181.3|
|3Q12e HDD Production||67.0||18.0||21.0||33.0||58.0||197.0|
|3Q12 HDD Production Surplus / (Shortfall)||7.2||1.7||2.9||2.2||1.8||15.7|
|3Q12e HDD Device Surplus / (Shortfall)||(36.0)|
|4Q12e HDD TAM (Mu)||61.0||16.6||18.5||31.4||57.3||184.8|
|4Q12e HDD Production||70.0||21.0||23.0||36.0||62.0||212.0|
|4Q12 HDD Production Surplus / (Shortfall)||9.0||4.4||4.5||4.6||4.7||27.2|
|4Q12e HDD Device Surplus / (Shortfall)||(8.8)|