Shulou(Shulou.com)11/24 Report--

Over the past two years, PC shipments have exploded when people were quarantined at home during the outbreak. Now, that growth is finally gone.

Local time on August 8, memory chip company Micron warned that PC demand performance is weak, the market is full of challenges. Nvidia also pre-released quarterly results, with second-quarter revenue of just $6.7 billion, well below the previous estimate of $8.1 billion, which shocked Wall Street.

The results of chip giants such as Intel and AMD also show that the PC market is slowing down across the board.

Revenue from Intel's customer computer business group fell 25 per cent year-on-year due to weak demand for PC. Intel had previously said it would freeze hiring in its desktop and laptop chip divisions because of falling sales prospects.

Su Zifeng, chief executive of AMD, said AMD was conservative about the outlook for PC's business in the coming quarters. Microsoft, on the other hand, said that the deterioration of the production release PC market led to a loss of $300 million in its Windows OEM business. This service provides OEM version of Windows system to PC manufacturers. In addition, South Korean memory chipmaker SK Hynix (SK Hynix) is considering whether to cut its capital expenditure by 1/3 in 2023.

In other words, the boom in PC sales growth has come to an end. At the peak of the past two years, PC sales recorded double-digit year-on-year growth, according to market research firm IDC. This is not surprising, as the bubble in PC sales is doomed to burst.

▲ IDC Global PC (desktops, notebooks, workstations) shipments 2012-2021 Source: CNBC

PC sales were either year-on-year or flat for years before the 2020 outbreak. With the spread of the epidemic, the PC industry has returned to strong growth because smartphones alone cannot meet the needs of home work and learning. As users get out of the house again, the dividend fades away.

However, there is still hope for the PC industry. Miyako Kitagawa, director of research at Gartner, a market research firm, believes that the industry will eventually return to growth, but it will take longer than expected.

Before the PC industry slowly returned to growth, the PC industry had been badly hit. Global PC shipments grew only 2.7 per cent year-on-year in 2019, according to IDC. At the time, even such a small increase was considered a miracle because the last year-on-year growth was traced back to 2011.

With the outbreak, many parts of the world have entered quarantine mode. With students and office workers as the main force, computers have become a rigid demand for many people, and PC sales have soared. According to IDC, global PC shipments were 81.3 million units in the third quarter of 2020, up 14.6% from the same period last year. In the fourth quarter of 2020, 91.6 million units were shipped, up 26.1% from the same period last year.

But now PC sales are plummeting again. Gartner reported that PC shipments fell significantly by 12.6% in the second quarter of 2022. "the market boom must be over and double-digit year-on-year growth is gone forever," said Ms Kitagawa. "this year, we expect PC shipments to fall 9 per cent year-on-year."

She expects the market to return to growth sometime in the next five years, but it may only be in single digits.

At present, companies buy laptops to equip home workers with office equipment, but this trend will slow as they return to work.

As far as consumers are concerned, as computers become more and more durable, a computer can last for five years or more.

Although sales have declined, the explosive growth brought about by the "epidemic dividend period" has helped the PC industry to some extent: expanding the number of devices held and nurturing user habits.

PC users will need new products although PC sales will decline year-on-year, the overall number of PC users has increased due to rapid growth during the outbreak. Although sales cannot maintain the high levels seen during the outbreak, Miyako Kitagawa believes that total sales will not fall below pre-epidemic levels.

"although consumers will not change their phones too quickly, they will always change their phones in a few years' time," she said. "We don't think consumers' habit of using PC will change easily."

She points out that consumers are becoming more and more accustomed to using PC to meet requirements such as online fitness classes and video chat. In addition, many gamers will continue to upgrade their latest computers.

However, some analysts believe that as consumers return to smartphones and tablets for their daily work, the market is facing the risk of an across-the-board decline. In addition, consumers will be more cautious about switching to new phones, given the potential recession. In this case, American users may continue to use old computers for some time. As a result, the end of the PC sales boom could turn into a slow decline for years, causing more pain for the PC industry.

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