According to a new IDC report, widespread flooding in Thailand may crimp PC shipments by as much as a fifth in the first quarter of 2012.^[1] The report also added that Thailand contributes about 40-45% of the global hard disk drive (HDD) production capacity, more than half of which may be affected by the recent floods. While many HDD makers will be impacted directly, the calamity will also have a detrimental impact on Apple’s (NASDAQ:AAPL) Mac production. The company’s new CEO, Tim Cook, said during Apple’s earnings call last month that several factories in the flood-affected land were inoperable and that he expected the company to have trouble procuring hard drives and hard drive parts for its Mac line. However, it is not only Apple’s but an industry-wide concern that will also impact competitors Acer, HP (NYSE:HPQ), Lenovo, Dell (NASDAQ:DELL) and Toshiba, among others.

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We don’t see Apple’s Q4 taking a major hit in terms of Mac sales as the company is expected to have an inventory of supplies as a buffer to weather any hard drive shortages in the near term. Also, given the hard drive shortages that loom, it’s likely that retailers and distributors will order more Macs than they actually need. Once this double-ordering plays out, an ugly first quarter next year is likely to hit.

The floods in Thailand have resulted in at least 320 deaths and massive property damage over the past few months. As a result HDD makers have been forced to raise prices substantially.^[1] This is likely to continue for some more time as the waters have shown no signs of receding.

Although the broader PC market continues to struggle, Apple has maintained its impressive growth in its Mac sales despite its higher price range. Apple reported record Mac sales for its fourth fiscal quarter with 4.89 million units sold. Considering the continued demand and Apple’s strong position, it will be interesting to see if the company decides to pass along these increased hard drive costs to its Mac users.

We believe that considering the strong margins that Apple is able to maintain on its Mac line, it will be better able to absorb the shocks of higher hard drive costs and hence not increase the pricing. We can’t say the same for its rivals that don’t have such high margins and may well be forced to increase their prices. So, while the overall PC market may continue to contract as tablets come into vogue and people prefer the Mac over other similarly priced products, Apple may well be able to increase its market share in the PC market.

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