Impact of Thailand floods continues to bite tech industry

IDG News Service - Nvidia lowered its revenue forecast Tuesday for the quarter ending Jan. 29, citing the impact of the hard disk drive (HDD) shortage caused by the Thailand floods on its mainstream GPU business.

Competitors Intel and Advanced Micro Devices also reported that they were affected by the floods, as HDD manufacturers like Western Digital start to bring their operations back to normal in Thailand.

Research firm Gartner however warned earlier this month that the major impact of the HDD shortage after the floods will be felt in the first half of this year, and even potentially continue through the year. The shortage had a limited impact on fourth quarter PC shipments and prices, but PC shipment growth could be temporarily affected during 2012, it said.

Western Digital, which saw its factories in Thailand inundated in the floods, said on Monday that it expects its hard disk drive production capacity to be restored to pre-flood levels only by the third quarter of this year.

The disk drive shortage caused by the flooding in Thailand had more impact on the mainstream GPU (graphics processing unit) segment than anticipated, Nvidia said. Revenue for the company's fiscal fourth quarter is now expected to be $950 million, plus or minus 1 percent, compared with original expectations of $1.0 billion, plus or minus 2 percent, provided on Nov. 10, it said. Shipments by some PC makers were reduced, and some were not able to include a GPU in their systems because of the higher prices of disk drives, Nvidia said.

Revenue from AMD's graphics segment decreased 10 percent to $382 million in the quarter ended Dec. 31, the company said on Tuesday. The decline was partly caused by the hard-drive shortage, it said.

Western Digital said it has continued to ramp HDD production in Thailand and on Sunday resumed slider production which had been suspended since Oct. 10.

The company said, while announcing its results for the quarter ended Dec. 30, that it had incurred charges and expenses of $199 million related to the flooding during the quarter. The company shipped 28.5 million drives in the quarter, in contrast to 57.8 million in the previous quarter.

The shortage of HDDs has affected Intel as well. The shortages did not affect PC sales as computer makers tried to clear out existing inventory, but there was a reduction in orders for new microprocessors, which hurt Intel, the company said earlier this month during its fourth-quarter earnings call. The shortage of hard drives will continue to affect the company in its first fiscal quarter, it said.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com