Asia's PC makers, already grappling with the prospect of subdued year-end holiday season consumer demand, are faced with a likely further slowdown in the lunar new year sales season as Thailand's floods cut the supply of hard disk drives. A likely shortage of the key component as floods threaten up to 30 percent of hard disk output could mean weak sales in the first quarter, hurting an industry already facing a challenge from smartphones and tablets such as Apple Inc's iPad and from slowing corporate spending on technology hardware. "From the Asia context, of course the impact will be on the Taiwan PC manufacturers, companies like Acer and Asustek Computer," said Satish Lele, vice president, consulting, Asia Pacific at Frost & Sullivan in Singapore. Thailand is the No. 2 maker of hard disk drives (HDD) after China and makes about half of global output taking place there , meaning damage caused by flooding could keep factories closed or hobbled for months, analysts and executives said. Lele said PC makers will have four to six weeks on average of inventory, but will feel the effects after that is gone. "From that context, the issue will start hitting these companies sometimes towards end of November and December, which for them are also key months because of the holiday season." Acer Inc declined to comment and Lenovo Group Ltd , the world's No.2 PC maker, had no immediate comment. World output of hard drives could fall as much as 30 percent in the final three months of 2011 and manufacturers that need them are now scrambling to snap up existing inventories, market research firm IHS iSuppli said. Pegatron Corp , the main contract manufacturer for Asustek Computer Inc , doesn't see a problem for six to eight weeks as makers have inventory, but after that it would depend on how fast things return to normal in Thailand. Pegatron Chief Financial Officer Charles Lin said there was one big difference between the Thailand situation and the aftermath of Japan's earthquake in March, which also disrupted supplies of components. "The concentration of some component manufacturing there was very high, but Thailand only makes up about a quarter of global hard disk production, so if plants elsewhere can ramp up, the effect this time may be less than that after the Japan quake," he said.
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