Demand for PC’s Collapses in Steepest Decline in Nine Years

Personal Computer shipments in the second quarter of 2022 slid by 12.6% from the year-ago period according to data from research firm Gartner Inc. This was the steepest decline in nine years, computer makers shipped 72 million PCs in April through June, down from 82.4 million the year prior. IDC said shipments collapsed even more, by 15.3%. The top three global PC vendors, Lenovo Group, HP and Dell saw shipment numbers fall in the second quarter.

The U.S. market for PCs decreased by 17.5%, largely because of a 50% decline in Chromebook shipments, according to Gartner.

“The decline we saw in the first quarter of 2022 has accelerated in the second quarter, driven by the ongoing geopolitical instability caused by the Russian Invasion of Ukraine, inflationary pressure on spending and a steep downturn in demand for Chromebooks,” said Mikako Kitagawa, a research director at Gartner.

The fall was even steeper another data provider, International Data Corp. said. IDC reported the year-over-year decline in global device shipments was around 15.3% in the second quarter. It should be noted the two research firms count the data slightly differently.

“Fears over a recession continue to mount and weaken demand across segments,” said Jitesh Ubrani, an IDC research manager.

Gartner and IDC both said the top three global PC vendors, Lenovo Group Ltd., $LNVGY HP Inc. $HPQ and Dell Technologies Inc. $DELL all saw shipment numbers fall in the second quarter.

  • Lenovo’s worldwide PC shipments declined year-over-year, the third consecutive quarter of decline for the company. However, Lenovo grew 2% in the worldwide desktop PC market, partly because the company improved its supply chain in EMEA.
  • HP experienced a decline of 27.5% in the second quarter of 2022, primarily due to a steep decrease in Chromebooks shipments.
  • Dell’s shipments declined year-over-year for the first time since the third quarter of 2020. Shipments were down across all key regions except Latin America where Dell registered 6.5% growth. Despite the overall shipments decline, Dell’s market share increased 1 percentage point compared to a year ago

This news shouldn’t come as a surprise as PC makers such as HP Inc. $HPQ and Dell Technologies Inc. $DELL have warned in their earnings updates that the Consumer is hurting from the economy and disruptions are hurting their supply chains. This has been particularly so for lower cost devices. Businesses are still spending on computers as offices reopen and staff switch from remote to hybrid work arrangements data shows.

“To maintain profits as inflation increases costs, the PC industry is having to raise average selling prices (ASPs) despite weakening demand. The reduction in the mix of PCs from Chromebooks, which tend to have low price points, and shift to premium products also helped increase the average ASP. However, an increase in inventory, especially in the consumer channel, could cause an ASP decline as vendors will try to lower inventory.” Mikako Kitagawa added

Intel Corp. $INTC Chief Financial Officer David Zinsner warned in June that the outlook for the second half of this year had gotten “a lot noisier”. Intel temporarily froze hiring in its PC-chip division in June, among other belt-tightening measures.

Memory-chip maker Micron Technology Inc. $MU late last month also lowered expectations in their sales outlook and has cut back on spending to adjust to the new market dynamics citing weakening demand.

“Near the end of fiscal Q3, we saw a significant reduction in near-term industry bit demand, primarily attributable to end demand weakness in consumer markets, including PC and smartphone,” Micron CEO Sanjay Mehrotra told investors on a conference call late Thursday. “These consumer markets have been impacted by the weakness in consumer spending in China, the Russia-Ukraine war, and rising inflation around the world.”

Source: IDC, Gartner, TC