Mobo Manufacturers Expect Shipment Decline in Q4, But HDD Motors Spinning Up

Multiple motherboard manufacturers are warning that precipitously rising HDD prices will impact their sales. Gigabyte has issued guidance that it now expects Q4 shipments to fall by 20 -25 percent, while Asustek predicts a much smaller decline of ~five percent. Analysts believe Asus is underestimating the impact of the price increases, and think the company's sales could fall as much as ten percent. This would be in line with guidance from MSI, ECS, and Asrock.

Exposure to the shortage will vary depending on the degree to which a manufacturer relies on retail sales and the price points of their various products. The impact on budget boards in the retail channel, for example, is likely to be catastrophic. Orders from companies like Dell and HP are likely more secure as OEM prices, thus far, have not risen to the same extent as retail HDD prices.

Meanwhile there's some limited good news on the HDD front. The motor manufacturer Nidec, which builds an estimated 75 percent of all HDD motors, has announced that its Ayutthaya plants in Thailand have resumed production. The company is also boosting production capacity at its Philippines and China facilities. Production in the Philippines is expected to rise to 25 million units (up from 15 million initially) with China boosting to 15 million, up from 10. This will change Nidec's overall capacity distribution significantly. Prior to the flooding, company capacity was divided at 62 percent in Thailand, 23 percent in the Philippines, and 15 percent in China. In the future, production capacity will be 36 percent in the Philippines, 21 percent in China, and just 43 percent in Thailand.

Hopefully all the manufacturing equipment was on the second floor

Nidec's increased production is welcome news, but it doesn't materially improve the total situation. Although initial reports focused primarily on Nidec's roll in HDD production, multiple drive manufacturers have facilities based in the same area. Said facilities are now underwater with more than three feet of water flooding some of Toshiba's facilities. Even if the water drained away tomorrow, it'll be months before Toshiba can clean and repair its plants. Western Digital faces similar problems and is easily the worst-hit company in the crisis. Meanwhile, even if the factories were themselves in pristine condition, the roads, electricity poles, and the homes of workers are all wrecked. Repair vehicles will pour into afflicted areas as the waters recede, but such efforts make it even more difficult move goods smoothly in and out of an area, at least in the short term.

Nidec's improved capacity will boost supplies of a vital component, but there are multiple points of failure along the supply chain and no easy way to restore full production.