Thailand faced some serious floods in the previous year. It had an adverse affect on many industries in Thailand, among which were the Hard disk manufacturers like Western Digital. Rise in price of hard drives was expected after the tragedy had struck. The only surprise came when Graphics card manufacturers like NVIDIA and AMD blamed the flood for their own low revenue at the end of fourth quarter of 2011.
When interviewed at the end of third quarter, the CEO’s of both companies claimed that, Thailand floods will not have any impact on their businesses. Since they did not have any manufacturing units in the country, nor were they depending on any industry present in Thailand to produce their GPUs. We have seen a complete reversal of statements at the end of fourth quarter. It is certain that they got it wrong at least in one of the statements. But was it the latter or the former?
According to the analogy used by the NVIDIA CEO Jen-Hsun Huang, in the statement that he issues after the fourth quarter results came out, their fourth quarter earnings were affected by high hard disk prices. The GPU makers’ revenue figures were less than impressive in the last quarter of 2011, and the blame goes to the Thailand based hard drive manufacturers. In the interview he explained they were affected by the disrupted supply of hard disks, caused by massive flooding of their facilities in Thailand.
The graphics card manufacturers used an age old argument to prove their point. According to them due to flooding in Thailand, the hard drive prices were raised, since their supply was disrupted. With hard disks becoming expensive, less people were inclined to purchase graphics cards.