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Flooding in Thailand Will Slow 2012 PC Growth Rate

Severe flooding in Thailand, which disrupted production of hard disk drives (HDD), will contribute to a slower growth rate for PCs, according to researcher IHS.

Shipments will only grow by 6.8 percent in 2012, down from the researcher’s previous outlook of 9.5 percent. Total PC unit shipments in 2012 are forecast to total 376 million in 2012, compared to the previous prediction of 399 million, partly due to the HDD shortage. Overall weak economic conditions and competition from media tablets will also contribute to the slowdown in PC growth.

The reduction in the growth rate of shipments will be in the notebook segment, which has been affected by the HDD shortage, IHS reported. Notebook PC shipments in 2012 now are expected to rise by 10.1 percent, down from the previous forecast of 13.8 percent growth.

Worldwide PC shipments in the first quarter of 2012 will amount to 84.2 million units, compared to the earlier forecast of 88 million, according to IHS. The first-quarter forecast predicts an 11.6 percent sequential decline from 95.3 million units in the fourth quarter of 2011. PC shipments usually drop in the first quarter compared to the peak holiday-selling season in the fourth quarter. However, the decline in 2012 will be far sharper than the 6 percent historical average decline, IHS reported.

“The PC supply chain says it has sufficient inventory for the fourth quarter of 2011,” said Matthew Wilkins, senior principal analyst, compute platforms for IHS. “However, those stockpiles will run out in the first quarter of 2012, impacting PC production during that period.”

The good news is HDD supply will begin to improve in the first quarter of 2012, although it will take time to replenish the supply chain.

Production facilities of some major drive manufacturers such as Western Digital and Toshiba flooded, halting production. Many of those facilities will resume production by the first quarter. In fact, Western Digital has restarted drive production at one of its facilities that had been under water.Some HDD suppliers have shifted production to locations outside of Thailand, which will help ease the shortage situation.

HDD industry supply will meet demand only by the end of the third quarter of 2012, according to IHS. In fact, the HDD market could face an inventory surplus by the end of 2012, after facilities in Thailand return to full production.

PC shipments should rebound from the HDD shortage in the second half of the year.