The devastating flooding in Thailand, due to ongoing monsoon rains, has been mounting for roughly four months now. According to this report from CNN, "So far, 281 people have been killed and four people are missing in Thailand, according to the country's Flood Relief Operations Command. Some 60 of the country's 76 provinces have so far been affected, impacting some eight million people."
The high tech industrial parks, which are north and upriver from Bangkok by an average of 40-70km, have seen an increase in rising waters. Some have been more affected than others, as only in the last day or two have some dikes and retention walls been breached leading to rising water on the estates and mandatory evacuations. The impact of encroaching water from upriver floodgate releases will not reach peak levels until the next few days (Oct. 14-17) and again later this month (Oct 28-31), when high tides will converge and likely exacerbate the situation, according to this recent report and this update from Bloomberg.
Bangkok is expected to be spared from flooding due to a widening of the Chao Phraya river, although that will take approximately five days. However, the Chao Phraya river does border the Hi-Tech Industrial Estate in Ayutthaya's Bang Pa-in district, and water is now flooding into that industrial park as well, according to an update today in the Bangkok Post.
Infrastructure disruptions and power shortages continue to mount and cause problems beyond the rising waters; among the logistics issues are massive (8km-long) traffic jams due to blocked highways (see this article from Bangkok Post).
Among the most recently affected by the floodwaters is the Rojana Industrial Park in Ayutthaya, Thailand, where chip manufacturers such as On Semi (see their press release here), Microsemi (see their press release here), and disk drive components supplier Hutchinson Technology Inc. are located, as reported in this EETimes article. The park is currently without electricity in order to maintain safety. Meanwhile, operations are, of course, suspended not only at this industrial park, but at many across Thailand, leaving the impact on the wider semiconductor and electronics industry supply chains in question, albeit temporarily (see this report on the Asian supply chain from Reuters and here from WSJ). Toshiba recently updated their status reports which can be followed here. While no damage has yet to be reported, the facilities will remain closed through 10/16/11 while the floodwaters and high tide convergence occurs.
Because most, if not all, of the industrial parks are now shuttered, at least through the weekend as they await high tide, the supply chain disruptions are mounting. While there was advanced-warning and many were able to divert production, the industry expects that the floods will have a noticeable negative impact on the upcoming 4Q11 and likely into the beginning of 2012. Hard drive component manufacturers, most notably Hutchinson Technology, are now all but shut down in Thailand due to the severe and ongoing flooding throughout the country which will have significant impact on downstream HDD companies, especially Western Digital, who represents almost half of Hutchinson's business, according to this WSJ MarketWatch report.
Reports from DigiTimes 10/12/11 indicate that unnamed sources within the hard drive sector are expecting disruptions to last for at least six weeks. The time frame, according to the DigiTimes article is based on the estimated time for a return to normal production levels.
According to this WSJ article from 10/12/11, the floods are expected to disrupt hard drive production:
"Seagate said its Thailand factories are operational, but said it is unclear what the magnitude of the supply-chain disruption will be on its output from Thailand. The company is actively managing its supply chain and factory output.
U.S. chip makers Western Digital Corp. (WDC), Semiconductor Corp. (ONNN) and Microsemi Corp. (MSCC) have also suspended production at factories in Thailand after floods damaged facilities, a sign that supply-chain disruptions could hurt production during a typically busy third quarter.
Western Digital's Thailand operations source much of its components from local suppliers, and flooding is causing problems with the region's infrastructure, including transportation and utilities. The company is working with its suppliers to maximize throughput and availability of parts."
An update from DigiTimes on 10/13/11 reports that Seagate facilities are still operational and functioning and are not experiencing logistical problems, and over-supply issues may abate due to these shortages, according to this report from WSJMarketWatch; Western Digital, however, is experiencing significant disruptions with constrained production due to the shut down of various facilities in addition to logistical and power problems.
Although operations in almost all of Thailand's high-tech industrial parks have been shut down, and water encroachment and levels are still rising, the question of how extensive the damage will prove to be, will remain unclear until after high tides abate. Thankfully, there has been warning and preparation time to allow some equipment and product to be relocated either to higher levels in buildings, to other downstream locations or to be sealed, according to Richard Han, CEO of Hana Microelectronics, in this video interview with Bloomberg TV. However, many pieces of equipment cannot be moved due to size, weight, complexity and other issues, meaning that there is little to be done beyond the work of sealing in the equipment and hoping it is enough to keep out the water as it rises.
The semiconductor and electronics industries are not alone in being affected by the worsening flood conditions, with automotive giants such as Honda, Nissan and Toyota severely affected, as well as OEMs such as Sony, Nikon and Pioneer have shut down facilities (see also this report from FinancialTimes). "Flooding has disrupted operations at 930 plants in 28 provinces, the Industry Ministry said in a statement yesterday," according to this Bloomberg report from 10/12/11.
Unfortunately while we know that many components and sectors along the semiconductor supply chain will experience shortages, just how extensive the damage and how long the situation will be remains unknown until the high tide periods (10/14-17 and 10/28-31) are over and a true assessment can occur. It is hoped that an initial, real understanding of the damage will be known after 10/17 and whether the plan of redirecting water into a widened Chao Phraya river will not only save Bangkok but also not back up and increase flooding problems in the high-tech industrial parks along and near its banks (see this Bloomberg report).