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© Western Digital Electronics Production | December 05, 2011

Thailand floods cost Western Digital over $200 million

The Thailand floods could cost Western Digital up to $275 million in the December quarter, exclusive of insurance recovery. Recovery is progressing quicker than expected however, with production starting at one facility.
In a statement on Thursday, the company said that hard drive industry shipments in the December quarter will be limited to approximately 120 million units due to constraints related to flooding in Thailand. Demand for the December quarter is in the range of 170 million to 180 million units.

They estimated that significant industry supply constraints will continue in the March quarter and beyond.

Western Digital expects to file a property damage claim of at least $50 million and an additional claim for business interruption during the December quarter.

"The passion, perseverance, ingenuity and execution exhibited by the WD team has been extraordinary and enabled us to make substantial progress in partially restoring our operations in Thailand, well in advance of our earliest expectations when the floods hit," said John Coyne, president and chief executive officer of WD.

Specific details
- Re-started production of hard drives this week in one of its buildings in Bang Pa-in (BPI), Thailand, one week ahead of internal schedules. This facility had been submerged in some six feet of water since October 15, the estate was pumped dry on November 17, main power was restored on November 26 and production restarted November 30
- Has removed all submerged slider manufacturing equipment from the BPI facilities for assessment, decontamination and refurbishment and has commenced decontamination and restoration of its remaining buildings in BPI
- Expects to recommence head slider production in BPI in the March 2012 quarter (Q3 FY'12) and also begin production in a new WD slider fab location in Penang, Malaysia, in the same time frame
-The company's other Thailand hard drive facilities at Navanakorn remain under approximately two feet of water. The industrial estate is expected to be pumped dry within ten days at which point the work of decontamination and refurbishment will commence.
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