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Hard-disk shortage to cause 4M unit PC shortfall, says analyst

The hard-disk drive crisis is easing but will affect PC shipments in the first quarter of 2012, says market researcher iSuppli.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
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PC shipments will take a hit in the first quarter next year to the tune of about 4 million units as a result of the continuing hard-disk drive shortage, IHS-iSuppli said today.

Flooding in Thailand has wreaked havoc on hard-disk drive (HDD) supply, as manufacturers try to recover from inundated component plants. This will result in a shortfall of 3.8 million PC shipments in the first quarter of 2012, according to IHS-iSuppli.

Worldwide PC shipments in the first quarter of 2012 will amount to 84.2 million units, compared with the earlier forecast of 88 million, the market researcher said. The new first-quarter forecast also calls for an 11.6 percent sequential decline from 95.3 million units in the fourth quarter of 2011.

"While PC shipments typically decrease in the first quarter compared to the peak holiday-selling season in the fourth quarter, the drop in 2012 will be far sharper than the 6 percent historical average decline," iSuppli said.

Western Digital, the world's largest HDD manufacturer in terms of volume, was one of the hardest hit by the flooding. The company has 37,000 workers in Thailand, and production in the country accounts for 60 percent of the company's total capacity, according to iSuppli.

IHS iSuppli December 2011

And global PC shipments for the whole of 2012 are now expected to expand by only 6.8 percent in 2012, down from the previous outlook of 9.5 percent growth.

Total PC unit shipments in 2012 are forecast at 376 million, compared with the previous prediction of 399 million, partly due to the HDD shortage, partly due to other factors, iSuppli said.

If this indeed happens, profitability at companies like Intel, whose fate is closely linked to the PC industry, may also be affected.

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The bulk of the reduction in shipments will be in the laptop market, said iSuppli. Laptop shipments in 2012 now are expected to rise only by 10.1 percent, down from the previous forecast of 13.8 percent growth.

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

Though supply constraints will ease in the first quarter of 2012, "it will take time, however, to replenish the supply chain," Wilkins said. Overall HDD industry supply is expected to meet demand only by the end of the third quarter of 2012.

Major HDD suppliers have already been shifting production to locations outside of Thailand, which will help ease the shortage situation, he said.