Laptop shortage looms after Thailand flood

Prices for hard drives are jumping as flooding in Thailand creates a shortage of the major component used in personal computers and one big customer is complaining of price gouging.

Drive manufacturers have raised prices by 20 to 40 percent and international electronics distributor Avnet Inc in turn has raised its prices by a similar amount after water poured into factories this month, said Avnet Senior Vice President Chuck Kostalnick.

"The word we're getting is that prices are going to continue to go up,'' he told Reuters on Friday. "This isn't going to be a one-time event.''

Flooding in Thailand, the No. 2 exporter of hard drives, has killed at least 377 people since July and devastated industrial areas in the center of the country.

NetGear Inc, which buys hard drives to use in commercial storage devices, in some cases has seen prices charged by distributors more than double from levels before disaster, said Shane Buckley. general manager of NetGear's commercial business.

"Speculators are gouging the market significantly and in some cases making enormous profits out of the people of Thailand's misery,'' Buckley told Reuters. He declined to say which distributors.

Neighborhood computer repair shops in the United States are also wrestling with scarcity and higher prices for hard drives as lingering inventories are quickly snapped up.

Top hard drive makers Western Digital Corp and Seagate Technologies Plc both have plants in Thailand, where flooding has killed at least 377 people since July and devastated industrialized areas in the center of the country.

Western Digital's factories are closed and Seagate, while its plants are running, warns it could face parts shortages.

AVOIDING LOSSES

World output of hard drives may fall as much as 30 percent in the final three months of 2011 and manufacturers that need them are now scrambling to snap up existing inventories, according to market research firm IHS iSuppli.

PC giants like Apple Inc and Dell Inc buy hard drives directly from Western Digital and Seagate and other manufacturers. Smaller companies, including NetGear, buy components from distributors like Ingram Micro Inc, Synnex Corp, Arrow Electronics, Avnet and Tech Data.

"We're trying to keep this as a neutral situation for us. We're trying not to lose anything through this process,'' Kostalnick told Reuters.

Fremont, Calif.-based Synnex declined to comment, as did Ingram Micro. Arrow did not comment on its prices and Tech Data did not respond to requests for comment.

Corner retail stores typically buy their components from national-level resellers further down the supply chain from the major international distributors.

A handful of shops contacted by Reuters said prices they pay for a typical hard drive have recently risen from around $60 to $90.

"The places I'm used to getting hard drives from, almost all of them are completely, 100 percent out of drives. The ones that still have them, where I used to buy 25 or 50 at a time, are now limiting me to one at a time,'' said Craig Marin, owner of The Computer Loft, a Boston repair store.

NetGear and local shops said they plan to pass the cost of more expensive hard drives on to their customers by raising their own prices.

"They're available, just at much higher prices,'' said David Bensinger, owner of The Little Laptop Shop in New York. "I hope our customers understand.''