Thailand floods may affect global electronics production

Companies like Western Digital and ON Semiconductor have suspended production

Severe floods in Thailand have disrupted production of electronics including hard disk drives and semiconductors, with a number of factories suspending operations.

Hard disk drive maker Seagate Technology has warned that a disruption in its supply chain could affect production, although its factories in Thailand are still in operation. "As a result of the disruption caused by the floods, Seagate anticipates hard drive supply will be constrained throughout the current quarter," the company said in a statement on Wednesday.

Competitor Western Digital said on Wednesday that it had suspended production of hard drives temporarily at facilities close to Bangkok, to protect employees, facilities and equipment. The company said that production of hard drives in its facilities in Thailand will be constrained in the current quarter due to the flooding.

About 280 people have died and a large number of provinces in the country have been inundated by the floods since late July, according to reports.

Microsemi, a semiconductor company in Aliso Viejo, California, said on Tuesday that one of its subcontracted manufacturing facilities located in the Rojana Industrial Park in Ayutthaya, north of Bangkok, has suspended operations due to damage sustained from flooding.

The Rojana Industrial Park informed the Stock Exchange of Thailand on Monday of difficult conditions at the park, stating that water has overwhelmed part of the area since Oct. 8.

ON Semiconductor, another tenant of the Rojana park, announced on Tuesday that operations of its Sanyo Semiconductor division in the park, have been suspended as a result of the flooding.

Hutchinson Technology said that its assembly operations in Ayutthaya have been temporarily suspended due to rising floodwaters in the Rojana park where the company's plant is located. It said it was moving its production to its U.S. assembly operations, and using existing inventory to meet customer demands, after water entered its assembly plant.

Seagate continues to operate its factories in Thailand, and employees are getting to work, the company said. But its hard disk drive component supply chain is getting disrupted, and supply of certain components could be affected, it added.

"Given the volatility of the situation it is unclear what the magnitude of the supply chain disruption will be to Seagate's hard disk drive output from its Thailand operations," the company said in a statement.

A Seagate spokesman said that the company also manufactures its products in China, Singapore, and Malaysia. But he would not break out how many drives are made by its factories in Thailand. "The reality is that our factories are open and operating in Thailand. The question is more about getting component supply," he added.

Seagate will provide further updates during its quarterly conference call on Oct. 20.

In the quarter to July 1, Western Digital shipped about 54 million hard drives from its facilities in Thailand and Malaysia, with approximately 60 percent coming from its Thailand sites. The company said it will provide further updates on the situation, including during an investor conference call on Oct. 19.

(James Niccolai in San Francisco contributed to this report)

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