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In October 2011, heavy monsoonal rains poured over a vast area of South-East Asia. Few cities were worse affected than Bangkok. The plight of the Thai people as the resulting floods heightened to become the worst in over 60 years was described to us nightly on the news for weeks. Little could be done to stop the waters as they inundated homes and businesses alike.
Among those businesses affected by the floods were Seagate and Western Digital - the world's two largest manufacturers of computer hard drives. By mid-October it was evident that both Seagate and Western Digital were going to struggle to maintain production as some parts for their drives became increasingly difficult to procure.
On October 17, Western Digital admitted flooding damage to its Thailand locations will have a significant impact on its operations and its ability to meet customer demand the rest of the year. The following day Apple CEO, Tim Cook, said he was "virtually certain there will be an overall industry shortage of disk drives." He further warned that Apple's Mac range would be most affected.
As the floods became worse in late October, many manufacturers were forced to close their Bangkok operations completely as employees found themselves unable to travel safely to the manufacturing plants for work. On October 26, networking equipment maker Digi International Inc. said flooding inundated an unnamed contract manufacturer, leaving it unclear when it was able resume working.
As company after company with interests in Thailand expressed concern over meeting quotas as well as budgetary expectations, it soon became clear that the Thailand floods of 2011 was going to be one of the most costly natural disasters in history. Several months later, we as consumers are starting to feel the knock-on effects to our pockets. The prices of hard drives have doubled since the events of October despite Seagate exceeding it's December production expectations. Before the floods, the average retail price of a 1TB hard drive was around $A100. As of early January, the same hard drive would be expected to cost about $A200.
In December, Intel cut its fourth-quarter revenue outlook, saying that companies are reducing inventories and microprocessor purchases because of shortages of hard drives. This forced decrease in production will eventually see a small increase in the price of CPU's later in 2012, while prices of hard drives eventually return to pre-flood levels.
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