Thailand Floods Raise Havoc On Hard Drive Business As Customers Scramble For Supplies

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Ingram Micro, in a statement from Paul Bay, executive vice president for North America, wrote, that the company is assessing the short and long-term impact of the Thailand floods on the IT channel at large. "Although we have inventory, we are being very mindful of the circumstances until we can get a better understanding of how this will impact the global supply chain and IT ecosystem," Ingram Micro wrote.

A statement from Arrow noted that the company is monitoring and addressing developments globally via the company’s global business continuity teams, and is in ongoing contact with suppliers to gauge any impact. "We are putting contingency plans in place with the goal of minimizing any effect on operations for our suppliers and solution providers and for Arrow," the statement read.

Tech Data in its statement wrote that it is in close contact with vendor partners impacted by the flooding. "It is still too early to confirm the mid-term potential impact of these events on the overall IT supply chain, but we continue to monitor the situation and will keep our channel partners (informed)," its statement read.

A Synnex spokesperson said that the distributor is getting updates constantly, and is not able to answer specific questions because what is true one day may be different the next.

The spokesperson said that after the massive Japan tsunami which in April disrupted the production of several key electronics components, Synnex was able to handle its supply chain fairly well, and that there is no reason to think this time would be different.

Officials of the top-tier storage vendors declined to discuss the hard drive situation either on or off the record.

However, EMC was forced to discuss the impact on Tuesday when the company announced its third quarter financials.

David Goulden, EMC CFO, said in response to questions from financial analysts about EMC's hard drive inventory and the potential impact on EMC's supply chain that the company is not sure how bad the situation will be because water levels in Thailand are still rising.

However, Goulden, in a transcript of the question and answer session provided by EMC, said that EMC is not expecting supply chain constraints or changes in the pricing environment for its supply change to change in the fourth quarter. "Bear in mind, we tend to be our supplier's largest customer and get pretty good treatment when it comes to situations like this," he said.

Goulden admitted, however, that EMC is still working with its suppliers about potential impacts for the first quarter of next year. "We just haven't finished all our analysis with our suppliers on Q1 yet for supply," he said. Smaller storage vendors said they are closely watching the Thailand floods, but are not panicking, in part because of the nature of the production in that country.

Eric Kelly, president and CEO of Overland Storage, said the situation will not be like the huge 600 percent to 800 percent spike in DRAM prices resulting from production cuts caused by a massive 1999 earthquake in Taiwan.

Kelly said he is seeing indications of spikes in hard drive prices and some drive shortages. "We're still checking with suppliers," he said. "Right now, we're OK. But we don't want to see a bidding war drive prices up."

Next: Dual Sourcing, Managing Inventory Are Key

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