The global PC market is undervalued

The global PC market has experienced a trough: inventories have risen sharply, prices have been cut, and orders have been cut, and a single product has fallen by 11%.

Core Tip: The PC market is experiencing an extreme "cold wave". Following mobile phones and TVs, PC manufacturers have also drastically cut orders. On July 23, a report released by a research institute showed that after consumer notebooks, orders for commercial notebooks also began to decrease, with a drop of 11%. HP and Dell cut orders for notebook computers and monitor panels #TN/IPS SCREENS# in the third quarter.

The PC market is experiencing an extreme "cold wave", and after mobile phones and TVs, PC manufacturers have also drastically cut orders. On July 23, a report released by a research institute showed that after consumer notebooks, orders for commercial notebooks also began to decrease, with a drop of 11%. HP and Dell cut orders for notebook computers and monitor panels # 4-inch TFT LCD Screen# in the third quarter.

At the same time, the inventory of PC manufacturers #5-INCH TOUCH SCREEN DISPLAY MODULE# has surged. In the first quarter alone, the inventory of finished PCs such as HP, Dell, and Acer surged by 56% year-on-year. The agency predicts that when the demand is not optimistic, the inventory of manufacturers will take two to three quarters to digest.

According to data released by market research firm Gartner, in the second quarter of 2022, the total number of PC shipments worldwide was 72 million units, down 12.6% from the same period last year, the largest drop in nine years. Among them, PC shipments in the Chinese market fell by 16%.

The PC market experienced its biggest rebound in 10 years from 2020 to 2021. However, after mid-2021, it will continue to weaken. Fortunately, the demand for commercial PCs is still strong. However, the current demand for commercial PCs is also gradually decreasing, and the performance in the first half of the year was lower than expected.

Gartner said that in the second quarter of 2022, the ranking of the top three suppliers in the global PC market remained unchanged, but shipments declined. Among them, HP fell 27.5%, Dell fell 5.2%, and Lenovo, which ranked first, fell 12.5%. Apple is the only supplier #TFT 6-iNCH LCD TOUCHSCREEN DISPLAY# to see growth in the second quarter of 2022.

The market demand continues to weaken, and the inventory of PC manufacturers is also showing a high status quo, and even a substantial increase. In terms of inventory, in the first quarter, the finished PC inventory of mainstream manufacturers such as HP, Dell, Lenovo, Acer, Asus, MSI, and Gigabyte climbed to US$14.8 billion, a 56% year-on-year increase. Industry institutions predict that these inventories will take about 2 to 3 quarters to fully digest. The agency predicts that the overall global PC shipments in 2022 will be 304 million units, and may further decline.

Originally, under the slowdown of the epidemic demand in the consumer PC market, PC manufacturers such as HP and Dell took advantage of the commercial market to fill their positions. Now, sales of commercial notebooks have also declined, and orders have been reduced, which is undoubtedly a major blow to manufacturers. In addition to slashing orders, some institutions predict that companies will show signs of reducing hardware budgets in 2022.

Relevant media reports said that at present, Dell has cut orders for notebook computers and display panels #SPI interface/ TOUCH SCREEN# in the third quarter, and HP's foundry company Inventec also said that the performance of the PC side in the third quarter may not be as expected. Regarding the order cut, HP insiders also told reporters that it was only a normal adjustment based on market volatility.

"Under weak market demand, inventories surged and manufacturers cut orders. In order to clear inventory, manufacturers directly caused PC prices to drop. Manufacturers started price wars. The market was chaotic and demand remained sluggish, resulting in a decrease in orders. The PC market seems to have entered a vicious state. Circulation." A person in charge of a PC manufacturer's channel dealer told reporters.

Jiang Han, a senior researcher at Pangu Think Tank, said, "Under high inventory, manufacturers are trying to manage inventory to digest it, but with the deterioration of the commercial market, the inventory of finished PCs may continue to rise in the second quarter."

The gradual "misfire" of the consumer electronics market such as PC will directly affect the order demand of panel # TFT COLOR# companies upstream in the industry chain, and will further lead to an overall oversupply of industrial production capacity.

"More than a year after the outbreak of the epidemic, the demand for online entertainment and online office has surged, driving the growth of the PC market, but this growth is not sustainable. With the changes in the global epidemic situation and the economic downturn, the overall demand has declined again. The PC market has also turned cold again." Ding Shaojiang, founder of Ding Technology, told a reporter from Securities Daily.

He believes that under this special period, PC companies need to have forward-looking judgments on demand changes, rationally plan supply chain capacity resources, and reduce inventory pressure through tools including price leverage. In the medium and long term, it is necessary to strengthen technology and product innovation for new application scenarios, enhance the ecological services and multi-scenario linkage value of products, and intelligently empower the B-side.

According to Deng Zhidong, an industrial economic investment expert and senior economist, traditional PC products have problems such as insufficient technological innovation, low level of intelligence, and weak ecological value extension "chain". beyond. PC manufacturers should combine multiple advantages in supply chain, brand, management, talents, etc., to promote the interconnection and joint layout with smart terminals such as mobile phones.

                                   Suki Lin

                                  July 26th