A poor supply of hard drive leads to an adverse effect on the revenue of intel in the fourth quarter
Intel today told investors that the global hard drive shortage caused by the Thailand flood has forced the company to reduce its fourth quarter outlook to a midpoint of $13.7 billion, down from a previous midpoint estimate of $14.7 billion.
Hundreds of people have died in flooding in Thailand that has caused billions of dollars in damages since late July and disrupted international supply chains in the PC and automobile industries.
PC makers have been scrambling to buy increasingly scarce hard drives after the flooding shut down factories in the country, which is the world's No 2 exporter of the components.
Intel's stock was down about 4.7 percent as a result of the announcement. According to the company, sales of PCs will be up sequentially for the quarter, but there are not as many sales into the supply chain as chip inventories are reduced due to the supply disruption in the hard drive industry. Intel expects hard drive shortages to persist through the first quarter and continued improvement of supply during the first half of the year.
There is no consistent opinion from analysts when hard drive supply will be catching up with demand again. IDC, for example, expects some impact to last into 2013, while IHS said that currently added emergency production volumes could lead to a hard drive oversupply by the end of 2012 once the normal production volume is available again.
Several other chip companies were dragged down by the announcement as well. AMD fell by about 4.9 percent, Nvidia by 4.0 percent, Micron by 3.3 percent, Broadcom by 3.1 percent and Texas Instruments by 2.8 percent.
Intel said its customers are reducing their stock of chips in anticipation of the hard drive shortage continuing early next year, although it said it still expects sales of PCs to be up in the fourth quarter.