Intel Corporation recently announced sales of personal computers are expected to be up sequentially in the fourth quarter. However, the worldwide PC supply chain is reducing inventories and microprocessor purchases as a result of hard disk drive supply shortages.
The company expects hard disk drive supply shortages to continue into the first quarter, followed by a rebuilding of microprocessor inventories as supplies of hard disk drives recover during the first half of 2012.
Intel's statement is a good indicator of what is likely to happen next year.
The supply shortage was due to the November floods in Thailand, which houses a number of hard disk drive suppliers who shut down their operations during the floods.
And, India will not be insulated from the shortage problem. Regional players will end 2011 on a high note. The combined desktop and mobile PC market in India totalled nearly 3.15 million units in the third quarter of 2011, a 13 per cent increase over the third quarter of 2010, according to Gartner, a research firm.
However, the year 2012 is going to be a difficult period as hard disk drive supply is likely to return to normal only by the mid-next year, according to officials who are working with domestic PC manufacturers but are not authorised to speak to the media. “We need to manage with whatever inventory we have. It is going to be a tough year,” they said.
Immediately after the floods, the Manufacturers' Association for Information Technology, the apex body actively representing Indian IT hardware sector, requested the industry and consumers for patience and support. The deluge had disrupted supply chain of many key hardware components.
The country is a hub for component makers and hard disk manufacturing plants of all the four main players are located in the area wrecked by the floods.
Dr Alok Bharadwaj, President, MAIT, in a recent conference in Chennai, said the Thailand impact will be nearly 40 per cent of global demand, causing tremendous supply shortage for laptops and desktops. The immediate impact is being felt for bulk supplies to Government bodies like Elcot.
All laptop and desktop companies operating in India have communicated to customers seeking their patience.
Mr Rajiv Rao, Director, Small and Medium Business for Lenovo India, recently told Business Line that the Thailand floods will impact the global PC industry badly. The shortage keeps changing every day. Just about a couple of weeks ago, they said 50 million hard disks were impacted. The estimates now keep varying, and everyday the situation of shortage keeps changing.
Big vendors like Lenovo were secure in October, November and December compared to the smaller players. Next quarter, it will be a bad situation, he said.
“One thing is for sure. The local players will be terribly impacted and we are already seeing the strain. The availability of hard disks to local players will dramatically drop because whatever was there in the pipeline was gone and fresh stock is not coming to the market. Also, the fresh stock will be prioritised for large vendors while local players, including Indian players, will be impacted,” he said.
However, if somebody has worked well in advance, they could be less impacted, he said.
Tamil Nadu project
Despite the shortage, officials in the Tamil Nadu government are confident that the vendors will deliver the laptops on time for the school project. “We have not received any formal communication from the vendors on the impact,” said an official on anonymity.