Silicon Valley companies may feel impact of Thailand floods

The historic floods in Thailand, the world's largest manufacturer of computer hard disk drives, could ripple across the global tech economy and disrupt an array of industries, from PC makers to cloud computing.

The rising monsoon waters

The rising monsoon waters, which began in July and have killed more than 400 people and forced thousands to evacuate their homes, have swamped seven major industrial parks housing many of the nation's hard-drive factories, which supply critical elements to companies just as Apple. The floods have as well wreaked havoc with other manufacturing sectors, from automobiles to jeans.

While Thailand would never make anyone's list as a research hub the way China or Taiwan would, the Southeast Asian country's role as the elements assembly-line for the computer industry underscores how problems in one link of the PC global supply chain can disrupt other industries.

World that has strong interdependence

"We are living in a world that has strong interdependence," said Hau Lee, a supply chain expert at Stanford University's Graduate School of Business. "It's not possible for you to be divorced from major disruptions. You may think your industry is not affected, nevertheless it is."

"Like many others, we source many elements from Thailand and have multiple factories that supply these elements," Apple CEO Tim Cook said while a conference call with analysts in October. "There are several factories that are currently not operable, and the recovery timeline for these factories is not known as late as this."

Supply problem

He said a supply problem would hit Apple's line of Macintosh computers, although not its hot-selling MacBook Air laptops, which use solid state drives that are made in other countries, including the United States, Japan, Taiwan and South Korea.

Still, Cook added, "It is something I am concerned about. We do expect, I'm virtually certain there will be an overall industry shortage of disk drives, as a result of the disaster. How it affects Apple, I'm not sure."

Intel, with no operations in Thailand, does not but forecast a direct threat to its business, company spokesman Chuck Mulloy said. The PC industry, for which the Santa Clara-based chip maker supplies chips, has shown it can weather a disaster, just as the earthquake and tsunami that struck Japan before this year.

The disaster could even put a crimp on whether cloud computing companies can roll out new services, IDC analyst John Rydning said.