Computer manufacturers Acer and Samsung Electronics have warned that the severe flooding in Thailand – the worst the country has seen in 50 years – will hit their production capabilities and that they are going to pass the higher costs on to consumers. The statements confirm experts concerns that the flooding, which has resulted in the deaths of hundreds of people, is going to disrupt the global supply chain of computers just before the busy holidays and end of year season.
Bangkok, which is responsible for nearly half the country’s economic output, has seen tens of thousands of people flee for fear of further flooding due to hit this weekend. The computer part worst hit by the manufacturing disruptions are hard disk drives, which have seen prices rise by close to 20 per cent since the start of the floods.
Sony, Nikon, Honda and Toyota have also reported problems for their production lines from the flooding, with Sony deciding to delay the release of some new camera models due to damage to its production site.
Acer has said it expects fourth quarter sales to fall by 5-10 per cent on the last quarter due to the floods. Samsung expects a shortage of supplies due to the flooding, but does not believe that its sales will be hurt. The impact of the floods on hard drive manufacturing has been so large because around a quarter of global hard drive manufacturing is done in Thailand. Increasing the severity of the problem is the fact that many other component suppliers are clustered nearby in large scale industrial parks. It is expected the shortage will continue until the final quarter of 2012.
Acer chief executive, JT Wang, said, “The whole PC production chain is stuck at a bottleneck. This is not a problem that we can solve by ourselves and so we have started raising prices.”