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Thailand's Floods Will Affect Optical Sales

Craig Matsumoto
10/27/2011

Flooding in Thailand has suspended production at Fabrinet Co. Ltd. (NYSE:FN) , the company that does manufacturing and test for a big portion of the optical components industry.

For some optical components vendors, that means December-quarter sales will be hit hard.

That could be true for some systems vendors, too. Infinera Corp. (Nasdaq: INFN) announced Wednesday evening that its December-quarter revenues could shrink by 5 to 15 percent because of the flooding. Fabrinet builds subsystems for Infinera.

Fabrinet had taken precautions by moving equipment beforehand, but the two buildings at its Chokchai campus, at Pathum Thani, Thailand, were breached Saturday night and were still flooded with three and a half feet of water as of Monday. Chokchai might not come back online this quarter, Fabrinet announced Monday.

Fabrinet's three other buildings, called the Pinehurst campus and located seven miles from Chokchai, aren't flooded. But production was suspended at Pinehurst due to the disaster's effects on traffic and utilities.

Here's what the major components vendors have said about the effects on business:

  • Emcore Corp. (Nasdaq: EMKR) -- "Significant impact" on December-quarter shipments. Emcore is trying to make up for the shortfall by moving some manufacturing to its own facilities in the United States and China.

  • JDSU (Nasdaq: JDSU; Toronto: JDU) -- Has products mainly in the Pinehurst facility, so any delays might be limited. (That's our conclusion, not JDSU's.) JDSU expects to provide details on its Nov. 1 earnings call.

  • Oclaro Inc. (Nasdaq: OCLR) -- Announced that it does its own manufacturing for 70 percent of its products; the remaining 30 percent go through Fabrinet. Even so, Oclaro postponed its September-quarter earnings announcement due to the disaster. Officials did say that the quarter wasn't a surprise; revenues will be about $106 million, which is in the range Oclaro previously predicted.

  • Opnext Inc. (Nasdaq: OPXT) -- Expects December revenues to be hit hard. Like JDSU, Opnext will report earnings on Nov. 1 and will provide more details then.


The companies also used their press releases to note that employees in the region are safe. Optical components are important and all, but the primary concern here is for the well-being of the people in Thailand.

Finisar Corp. (Nasdaq: FNSR), NeoPhotonics Corp. (NYSE: NPTN) and Oplink Communications Inc. (Nasdaq: OPLK) do their own manufacturing and rely on Fabrinet minimally, if at all.

— Craig Matsumoto, West Coast Editor, Light Reading

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Steve0616
Steve0616
12/5/2012 | 4:50:24 PM
re: Thailand's Floods Will Affect Optical Sales


Anybody have a handle on this?  Interested to know how much redundancy exists in the optical supply chain? Is there real danger of wholesale order pushouts up and down the food chain due to a part or two becoming unavailable because its sole sourced from one of Fabrinet's facilities?  Parts availability is an all or none quandry.

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