Demand and Supply

I’m sure you know about the flooding that hit Thailand and caused absolute devastation but you may not realize how that event is impacting us here. Most hard drive manufacturers rely heavily on production capabilities in Thailand which has turned out to be a pretty bad things right now:

The brunt of the flood has since flowed south — Bangkok saw horrendous flooding through the weekend, with more than 380 dead and 2.4 million people affected. But the water remains in central Thailand, and it will take weeks just to get the water out. Repairing the facilities and replacing the equipment will take many months.

The flood took out approximately 25 percent of the world’s hard drive manufacturing capacity — but that isn’t the whole story.

Western Digital has a second large plant in Malaysia. Seagate doesn’t have any manufacturing in the flooded areas. Toshiba makes hard drives in several locations, not just Bang-Pa In. All of the major manufacturers rely on parts supplied by companies that were hit by the floods, but there are alternate suppliers in different locations.

According to the article these companies were smart enough to have manufacturing facilities elsewhere which means their production capacity hasn’t been devastated. Let this be a lesson to everybody, never keep all of your eggs in one basket. Even though hard drive manufacturers are expected to meet their production numbers this year the prices of drives have certainly jumped right the fuck up. Why is this? The same reason ammunition prices jacked way up shortly after Obama’s election, rumors leading to hoarding.

Many people are buying up harddrives hoping that they’ll be able to ask even high prices in the future. While this purchasing crazy is leading to higher prices it will only last for a short while. Still it shows how fragile commodity prices are how demand can go up due to natural disasters elsewhere in the world.