How the Conflict Disrupted Cross-Border Manufacturing and Logistics
The recent escalation of the Thailand-Cambodia border conflict has disrupted a critical land-based supply chain artery in the Indochina Peninsula. The Poipet–Aranyaprathet border crossing, a key node in the regional land bridge, handles more than 70 percent of land cargo flows between the two countries and serves as a primary connection between Cambodia’s Sihanoukville Port and Thailand’s Eastern Economic Corridor.
The conflict has triggered a two-way industrial supply shock. For Thailand, disruptions to imports of cassava, rubber, scrap steel, and other raw materials from Cambodia have constrained production in starch, ethanol, and steel industries. For Cambodia, the inability to import fuel and chemical machinery from Thailand—where approximately 90 percent of diesel and 80 percent of gasoline supplies originate—has caused widespread factory shutdowns due to energy shortages.
According to assessments cited by Thailand’s Ministry of Finance, economic losses in the early stage of the conflict exceeded 10 billion baht, excluding indirect losses linked to suspended border trade. These impacts extend beyond border regions and have begun to affect broader manufacturing output and economic performance in both countries.
In a highly globalized manufacturing environment, regional geopolitical disruptions rarely remain local. Thailand’s role as a global production hub means that fluctuations in its manufacturing capacity are now propagating across international supply chains, particularly in the electronic information industry.
Why Thailand’s HDD Manufacturing Capacity Matters Globally
Thailand plays a central role in the global hard disk drive industry, accounting for approximately 40 percent of global HDD production capacity. All four major HDD manufacturers—Western Digital, Seagate, Hitachi Vantara, and Toshiba—operate core manufacturing facilities in the country.
Roughly 60 percent of Western Digital’s production capacity and 50 percent of Toshiba’s capacity are concentrated in Thailand. The country also accounts for 19 percent of global SATA hard drive exports and remains a key location for final HDD assembly. Western Digital’s industrial park in Nakhon Ratchasima is expected to reach a production capacity of 40 million units in 2025, with high-end 40-terabyte production lines representing up to 35 percent of total output. Seagate and other manufacturers have similarly located core assembly and testing operations in Thailand.
Because HDDs continue to offer large storage capacity at relatively low cost, they remain essential to global data center storage architectures. As a result, stability in Thailand’s HDD production directly affects data center construction timelines and downstream industries such as server manufacturing and enterprise data storage.
Three Ways the Conflict Is Pressuring the Global HDD Supply Chain
The Thailand-Cambodia conflict has affected global HDD supply chains through three primary mechanisms: logistics disruption, rising costs, and production instability.
Border closures have forced manufacturers to abandon direct land routes and adopt longer detours through Laos and Vietnam or shift to maritime and air transport. These changes have increased logistics costs by more than 30 percent and extended transportation times by two to four days. For electronics manufacturers that rely on just-in-time inventory and strict delivery schedules, this has increased inventory holding costs and raised the risk of order delays.
Production capacity has also been affected. Some auxiliary materials and components used in HDD manufacturing depend on cross-border supply, and disruptions have led to raw material shortages on certain production lines. Labor availability has further exacerbated the situation. Of the roughly 800,000 Cambodian workers employed in Thailand, approximately 780,000 reportedly returned home within weeks of the conflict’s escalation. This has created labor shortages across multiple industries, including HDD-related support operations, pushing some facilities into partial shutdowns.
These pressures have intensified price volatility in an already tight global storage market in 2025. Reported procurement prices for mainstream 16-terabyte surveillance-grade HDDs rose by over40 percent within six months, while prices for enterprise-class large-capacity HDDs increased by nearly 50 percent. Channel-level stockpiling has further increased procurement costs for downstream buyers.
Spillover Effects Across Automotive, Textiles, and Agriculture
The impact of the conflict extends well beyond the HDD sector. In automotive manufacturing, Japanese component suppliers such as Nidec and Yazaki have suspended production at facilities near the border. As Southeast Asia’s largest automobile producer and exporter, disruptions in Thailand’s cross-border supplier network are cascading through the global automotive value chain.
In the textile sector, Cambodia’s role as a major garment export base depends heavily on Thai raw materials and port transshipment. Factory shutdowns have disrupted order fulfillment for global apparel brands. In agricultural processing, border blockages have delayed Thailand’s exports of durian and mangosteen to China and stranded Cambodian cassava and rice shipments. As a result, prices of Southeast Asian fruits in Kunming markets reportedly increased by 22 percent.
What the Conflict Reveals About Supply Chain Resilience
The Thailand-Cambodia conflict highlights the fragility of cost-optimized, single-dependency supply chain models. For years, industries such as HDDs and automotive components shifted production to Southeast Asia to capture cost advantages, creating a structure centered on “Thailand as core manufacturing plus Cambodia as supporting processing.” This model has proven vulnerable to geopolitical disruption.
In response, companies including Western Digital have begun reassessing their production capacity strategies and planning backup capacity within Southeast Asia. More broadly, global manufacturing is shifting from “single optimal” configurations to “multi-point suboptimal” models and from zero-inventory approaches to safety inventory combined with multi-site redundancy. In this transition, supply chain stability is increasingly taking precedence over cost minimization.
For multinational enterprises, the priority now is to diversify production footprints and strengthen emergency response and early warning mechanisms. Regional economies face parallel pressures to secure cross-border trade channels and reinforce supporting infrastructure. Balancing cost efficiency with risk mitigation has become a long-term structural challenge for global manufacturing in an increasingly complex geopolitical environment.
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