Author | Li Jinglin
The global PC market has been booming for seven consecutive quarters and maintained positive growth, but in 2022, this trend came to an abrupt end.
According to Canalys data, in the first quarter of 2022, the shipment of in the Chinese market (including desktop computers, laptops, and workstations) was about 11.7 million units, a year-on-year decrease of 1%. Global sales are less optimistic than the Chinese market, with a year-on-year decline of 5.1%, with a total sales volume of 80.5 million units.
By the second quarter, the pace of year-on-year decline still could not be stopped. Although the total shipment volume of 19.4 million units increased by 13% month-on-month, it still fell by 3% compared with the same period last year. From the perspective of the global market, the evaluation given by analysis agency Canalys is that has "been significantly damaged", with total shipments plummeting by 15%, which is the lowest level since the first quarter of 2020.
PC equipment shipment volume and change range | Source: Canalys
All brands are not easy either. In the second quarter of this year, all the top five brands were declining without exception. According to Canalys data, the annual growth rate of HP is -27.5%, and Lenovo , Dell , Acer , and Asus all showed varying degrees of recession.
, in Lenovo's latest fiscal first quarter performance report for fiscal year 2022/23, showed that the smart device business group, which includes personal computers, tablets, smartphones and other smart devices, had a revenue decline of 3% in the quarter, and the sales of non-personal computer business actually increased by by 412% year-on-year. , the chairman and CEO of Lenovo Group , emphasized in today's financial statement that its turnover of business outside of personal computers accounted for the highest proportion of the group's overall business turnover, which implied that Lenovo has no dependence on growth on PC.
Even Apple computers were not selling well in the second quarter. According to its financial report for the third fiscal quarter of 2022 (2022 Natural Year Second Quarter) 2022, Mac revenue was US$7.382 billion, a year-on-year decline of 10.35%.
products cannot be sold, and the brand pressure can be imagined. In April this year, there was news that almost all the leading PC manufacturers are "cutting orders". Lenovo, HP, Acer, Asus, etc. have begun to lower annual shipment targets. Dell was even exposed that the demand for monitors and laptop panels will be reduced by 50% in the third quarter, which almost means that this old PC manufacturer has cut off half of its business lines.
Is the sudden cold winter just a short-term cold wind passing through, or does it indicate that PC products are gradually being replaced in the minds of consumers?
No 100 days of spending
"A laptop may not be sold in a day," an Asus dealer in Shanghai said in an interview with the media in July this year: "The gross profit of a laptop is between 50 and 200 yuan. If you include operating costs such as rent, personnel, after-sales service, etc., it is almost no money."
Faced with this situation, many people think that it is the prosperity of online channels, which has squeezed out the space of offline channels. However, according to Chen Shuxin, senior research manager of IDCh, the online channel of the laptop market in the first quarter of 2022 (including the manufacturer's official website and third-party e-commerce platform) accounts for 58.11% of the overall notebook market. "It is expected that the proportion of online channels will still increase in the future, but the growth rate will slow down." It can be seen that offline channels are still important. If you cannot make money, the losses to the brand will still be heavy.
What's more, online channels start to make large subsidies as soon as the promotion arrives, and brands are also competing for price cuts. Although sales can boost in the short term, there is still a question mark on how much benefits the brand can be. This year, the discounts for brands such as Xiaomi , Huawei range from 300 yuan to 500 yuan. The competition discount can also reflect the brand's sales anxiety from the perspective of the competition. Why can't
PC suddenly sell?
There are many reasons. First of all, from the consumer side, the weak consumption caused by the weakness of global economy has had a significant impact on the consumption of electronic products.In addition, PC equipment is a consumable product, with a long replacement cycle and limited service groups. It is a non-productive group with urgent needs. It is likely that they will not choose to replace the equipment during periods of high consumption pressure unless they have to.
The dispersion of the epidemic dividend is also an important reason for the weak sales of PC products. Looking back at the years of the epidemic, the strong demand for working and learning from home caused by isolation has promoted the sales of PC products. According to Canalys data, China's PC market performed strongly in 2021, with shipments reaching a record 57 million units, a year-on-year increase of 10%.
Large PC manufacturers have also enjoyed the dividends of the epidemic. Lenovo's annual shipment growth rate in 2021 was as high as 21.5%, and Acer even handed over an annual growth rate data of 36.4%.
PC product shipments in the Chinese market in 2021 Picture source: Canalys
Time goes back one year, and PC shipments in the Chinese market were 49.1 million units, a year-on-year increase of 1.7%. Although the increase in of data is not obvious, this is the first time that China's computer sales have increased in the past nine years. Data from the US data company IDC shows that since the second quarter of 2020, China's computer shipments have maintained a 10% growth for three consecutive quarters. Online education, games, and corporate office purchasing supported the sales of computers back then. It is not a coincidence that the industry data has formed a certain degree of fit with the social epidemic control situation. In June this year, at the shareholders' meeting held by Acer Group , Chairman Chen Junsheng made it clear: "The PC market has reversed and shows a trend of oversupply."
Chen Junsheng said in an interview that Acer's inventory turnover days have been extended from 7.8 weeks before the epidemic to 8 weeks now. The company has begun to prepare for the second half of the year, and Acer's Korean factory has stopped some production lines.
Faced with the current market conditions, Chen Junsheng expressed his feelings that "there is no better flower than a hundred days". Cai Huifen, vice president of Gartner Research Institute, market research and consulting company, also made it clear: "In the early stages of the outbreak of the epidemic in 2020, people's demand for online classes and online offices increased greatly, so a wave of phone replacement has occurred. But at this time, the Chinese PC market is already in a saturation state. Now, the peak of the phone replacement has passed, and sales will naturally decline."
Generally speaking, the PC usage cycle will exceed five years, and it has just two to three years since the previous wave of phone replacement. Market demand just stuck in a relatively awkward downward cycle.
The epidemic has covered the whole society and has a severe reaction. The supply chain, which has played a choke in the electronics consumer industry, has been deeply affected.
Canalys analyst Emma Xu gave an explanation for the decline in Q2 sales: For most of the second quarter, factory and port operations in Shanghai, Kunshan and Jiangsu were interrupted, resulting in severe delays in orders from all major PC suppliers. Although production and coordination began to improve by the end of May, output throughout the second quarter was below normal.
demand plummeted, but supply chain costs are still rising.
According to Observer Network , the US CPU giant Intel has informed customers that due to global inflation, the cost of production and raw material soaring, Intel will implement extensive price hikes on most products starting in October this year, that is, the fourth quarter of this year, involving personal computers and server CPU, as well as products including PCH, FPGA, NUC mini computers and other connected chips. The double pressure of Intel has made the decision to raise prices by increasing prices due to the tight supply chain and the surge in costs caused by the inflation of in the United States.
Combined with various factors, analysis agencies generally look down on PC sales in 2022 - Gartner's recent forecast shows that global PC shipments will drop sharply by 9.5% in 2022. Among them, the demand for PCs by enterprises is expected to fall by 7.2% year-on-year, and the decline in demand for PCs by individual consumers is more obvious, with a decrease of 13.1%.
Upstream giants were damaged
At a time when the global industrial chain is highly integrated, the market short sluggishness will soon be transmitted to all links. Judging from the existing corporate financial report data and public media reports, the upstream and downstream of the PC industry is not easy.
At the end of last year, Intel launched the 12th generation Core desktop processor, injecting fresh blood into the PC market. The hot PC market in 2021 also caused Intel's performance to rise. In the fourth quarter, revenue reached US$19.5 billion, a year-on-year increase of 4%, and annual revenue was US$74.7 billion, a year-on-year increase of 2%. Both data set historical records.
However, on July 29, Intel released its second quarter 2022 financial report, with all indicators lower than expected, and the company's operations fell into a trough.
According to the financial report, Intel's total revenue in the second quarter was US$15.321 billion, a 22% decrease from US$19.631 billion in the same period last year, and is far from the original estimated US$18 billion; the net loss was US$454 million, while the net profit of US$5.061 billion in the same period last year, which is also Intel's first loss in 30 years; gross profit margin fell from 50.4% in the previous quarter to 36.5%, which is also far lower than Intel's expected 48%.
Bernstein analyst Stacey Lass said bluntly that this was the worst performance report he has ever seen in his career.
Intel attributed this disappointing performance to the economic downturn and the decline in demand for personal computers - judging from the facts stated in the previous article, this reason is relatively reasonable. Intel's specific business line performance also verified their statement: the revenue of (CCG) , a client computing business closely related to the PC industry, was US$7.665 billion, a year-on-year decrease of 25%; the revenue of data center and artificial intelligence business (DCAI) was US$4.649 billion, a year-on-year decrease of 16%.
Faced with the decline, Intel had to lower its performance expectations for the full year of 2022, and its expected revenue will also be lowered from the original 76 billion to between US$65 billion and US$68 billion.
chip giant AMD was in a completely opposite situation to Intel in the second quarter, achieving record revenue for eight consecutive quarters. But even so, it is difficult for AMD to be optimistic about the future. For the third quarter, AMD expects revenue to be US$6.7 billion, up and down US$200 million, which is slightly lower than analysts' expectations, and the year-on-year growth rate has also dropped from 70% in the first two quarters to 55%.
In response, AMD CEO Su Zifeng answered that PC sales declined, and AMD was not immune to the impact. She expected that the PC market would still be weak in recent months, and said, "Our guidance on PC is more conservative." The shipments of electronic products such as
PC, mobile phones and other electronic products have been declining, which has also had an impact on the panel industry. The short-term mismatch of supply and demand has led to the continuous decline in panel prices.
According to WitsView data, global laptop panel shipments in May 2022 decreased by 27.84% year-on-year to 16.484 million pieces, and global laptop panel shipments decreased by 24.01% year-on-year to 1.019 million square meters. As demand plummeted and corporate inventory turnover pressure increased, panel prices are also falling. According to Omdia data, in June 2022, the prices of 10.1-inch (tablet computer) , 14-inch (laptop computer) , and 23.8-inch (display) LCDIT panels fell by 4.0%, 8.8%, and 7.8% month-on-month.
In the first quarter conference call, BOE said that the panel price has bottomed out and will usher in structural adjustments in the second half of 2021. However, this conclusion ultimately depends on the changes in the supply and demand relationship. Only when the consumer market boosts and demand recovers can panel prices truly rebound.
The economic downturn and the epidemic will always be improved and alleviated. What really affects an industry is at the market demand level. Overall, global demand for PC products began to decline rapidly after reaching its peak in 2020, and many analysts believe that PC demand has approached saturation.
Compared with the dividends brought by the explosion of short-term demand, the PC industry may need more product breakthroughs and innovations.
