The serious flooding in Thailand is causing further disruption to the supply chain, with telecoms equipment manufacturer Opnext the latest to report problems.
Heavy seasonal rain has lead to flooding in factories, causing companies to rethink their supply or shut down operations altogether. Western Digital, for example, has a couple of factories literally underwater – causing a knock-on effect to other firms which rely on it as a supplier.
The floods have also impacted the telecoms industry.
Opnext’s primary contract manufacturer, Fabrinet, announced that it has been hit by flooding in its offices and manufacturing floor spaces where Opnext products are made. Fabrinet is reporting several feet of water at its Chokchai campus.
Unlike the tsunami in Japan, where roads and infrastructure were put in place as soon as possible, Thailand is suffering from a lack of transportation and utilities. Part of the problem is due to rapid urbanisation in the country.
Opnext says it’s difficult to ascertain the impact on its financial results, as it plays the waiting game to find out how long a clear-up operation will take.
But it has stated that the flooding will have a knock on effect on its operations and its ability to meet customer demand in the near future. Fabrinet could be required to suspend operations at Chokchai for longer than it thinks.
Even worse, Thailand’s government could call a state of emergency which would further damage operations.
More details should appear in the company’s second fiscal quarter earnings report, next Tuesday.
Meanwhile, Thai authorities have called a five day holiday to ease the impact of the floods as they threaten Bangkok.