Next show in
 d  h  m
Back

Thailand

14 November 2011
 
Devastating floods in Thailand that have caused hundreds of deaths have also immobilized factories belonging to a major contract manufacturer in the optical industry.
 

Fabrinet reported that buildings at its Chokchai campus in Pathum Thani were under five feet of water at one point.  In a statement accompanying its earnings call on 7 November, the company acknowledged that the Chokchai campus may be out of action permanently.

The flooding did not breach the company's Pinehurst campus, located seven miles north of Chokchai, but production was suspended for approximately three weeks because the water had knocked out utilities and local transport networks.
 
Fabrinet says that, over time, it will probably move all manufacturing to the Pinehurst campus, where a new building – its sixth at the site – is due to come online in January.
 
Tom Mitchell, chief executive officer of Fabrinet, said, "Through the tireless efforts and resourcefulness of our employees, and in the midst of this natural disaster, we are preparing to resume production at our Pinehurst campus, one of our two manufacturing campuses in Thailand. In fact, today we began production at Pinehurst on a limited scale and anticipate ramping to full production at the Pinehurst campus during the next two weeks."
 
Optical firms say the flooding will have a significant impact on operations.  
 
JDSU, whose laser products are made in the Pinehurst campus, says revenues for its second quarter 2012, which ends December 31, will be lowered by $35—45 million due to the flooding, depending on how quickly manufacturing can ramp back up.
 
Oclaro, which puts 30% of its finished products through Fabrinet, anticipates a revenue loss of $25—30 million in the December quarter, bringing its revenues for that quarter down to $75—85 million.  Things won’t get back to normal until June, the company says.
 
For Opnext, which has products accounting for 43% of revenues manufactured at the still-closed Chokchai factories, the impact will be more severe.  The company is moving production to internal facilities in California and Japan, and to alternative contract manufacturers in China and Japan as part of its contingency plans. Given the severity of the situation, the company was unable to provide any guidance on revenues.
 
This is the second natural disaster to hit the unfortunate Opnext.  In March, the company’s module assembly and chip fabrication facilities in Totsuka, Japan, were damaged in the magnitude 9.0 earthquake.
 
Other Fabrinet customers affected by the flooding include systems vendor Infinera, laser maker Emcore, and II-VI Systems, which uses Fabrinet’s Chokchai factories to make products for its recently acquired Aegis Lightwave division.
 
By Pauline Rigby