HDD industry

As you requested, I have studied the reason behind the decline in HDD industry and prepared this report.
HDD industry started in the 1980’s and since then Thailand has enjoyed the benefits. The biggest hard
disk drives exporters are Seagate, IBM Storage, and Fujitsu and the industry employs 100,000 people.
The findings and analysis in this report are based on the interviews with presidents of Board of
Investment, vice president of Seagate Technology Thailand and some computer equipment makers.

Findings and analysis

Recently there has been a decline in HDD industry because many labour-intensive assembly operations
are relocating to cheaper countries like the Philippines, Vietnam and China. This gradual departure of
hard-disk-drive producers would certainly threaten the prospects of export- led growth. Another effect of
the decline will low investments from hi-tech industries in the country.

There are some obvious causes of the decline. Because of wage growth in Thailand, some producers are
moving into other Asian countries. Wage increased because Thai baht has recently strengthened. Another
cause is Thailand’s unskilled workers. More than half of the workers in the industry have only high
education. As a result, it is difficult for the industry to introduce high-tech automation and technology
transfer. Moreover, other Asian countries like Singapore and Malaysia have a well-developed
infrastructure of component suppliers, precision metalworker, repair workshops and other support
services. Thailand does not have this kind of supply network.

Recommendations

I would like to suggest some recommendations in order to retain the strength of HDD industry.

1. The government should control the increase of Thai baht by setting the exchange rate at 35 to 36
for at least two to three years.
2. The educational level of the workforce in this industry should be improved by providing training
programs linking universities, technical schools and firms. And also, Thai universities should be
encouraged to open more high technology related faculties.
3. The government should develop a local hard drive supply network like the one in Singapore and
Malaysia by offering the industry incentives such as subsidies and tax breaks.
4. The government must meet all the HDD producers in Thailand and ensure them that all actions
are taken to support the industry.

Conclusions

I believe that the industry will grow again if the above recommendations are implemented. Stable Thai
baht exchange rate will ensure the producers that they will not face the sudden increase in labour cost.
More well-trained skilled workers will help HDD producers to produce hi-end products. A better
suppliers network will guarantee the components and services that the industry requires. Finally, major
HDD producers will remain in Thailand if the know the government is really trying to help develop this
industry.