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WD Resumes HDD Production at Just One Factory

On Thursday in its financial outlook for the December quarter, Western Digital gave an update on its Thailand flood recovery effort, reporting that production of hard drives finally resumed this week in one of its buildings in Bang Pa-in (BPI), Thailand, just one week ahead of internal schedules.

According to the company, this particular building was previously standing in six feet of water since flooding began back on October 15. The estate was eventually pumped dry as of November 17, and the lights officially switched back on over a week later. Hard drive production finally resumed as of November 30, the company said.

As for the remaining buildings at its BPI facility, all submerged slider manufacturing equipment has been removed from the BPI facilities for assessment, decontamination and refurbishment -- structural decontamination and restoration has now commenced. Western Digital expects to resume head slider production 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, however, still remain under approximately two feet of water. Western Digital expects the industrial estate to be pumped dry within ten days at which point the work of decontamination and refurbishment will commence.

"The company believes that hard drive industry shipments in the December quarter will be limited to approximately 120 million units due to production and supply constraints related to the historic flooding in Thailand," Western Digital said on Thursday. "This includes units that were in inventory at the beginning of the quarter. The company believes that demand for the December quarter is in the range of 170 million to 180 million units. The company believes that significant industry supply constraints will continue in the March quarter and beyond."

Earlier in the report, Western Digital said it now expects a fiscal Q2 (December quarter) revenue of at least $1.8 billion and gross margins above the high end of its business model range of 18-percent to 23-percent. The company also noted that it will be "vigorously contesting the arbitration decision announced November 21, 2011, in the legal matter with Seagate and has not yet determined the accounting treatment associated with this matter."

To read the full report, head here.