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PC makers have struggled to build enough computers and buy enough components as demand for desktops and notebooks from businesses and individuals continues to rise due to Covid. However, store shelves are now mostly stocked, with demand for PCs dwindling due to inflation and uncertainty caused by the war in Ukraine. As a result, Acer chairman Jason Chen warned this week that an oversupply of notebooks is on the way.
Weakening consumer PC demand
Rising prices of energy, food and other essential commodities have led to inflation around the world. As a result, many people are rethinking their spending habits and cutting back on technology purchases. Overall, recent months haven’t been particularly good for consumer PC sales, DigiTimes reports. Acer, Asus and HP have indicated in recent weeks that the consumer market is showing signs of weakness and demand is slowing.
“From a demand perspective, we expect to continue to see strong business demand with softening consumer businesses,” HP President and CEO Enrique Llores said on the company’s May 31 earnings call. Industry-wide component shortages, which we expect to continue in fiscal 2022, are secondly, Covid-related disruptions in China, which we expect to primarily impact fiscal Q3.
In Q2 2022, HP’s business PC sales rose 18 percent year-over-year, while the company’s consumer systems sales fell 6 percent. Price increases across product categories and higher sales of premium systems led to notebook revenue up 3 percent, desktop revenue up 28 percent, and workstation sales up 21 percent year-over-year.
According to IDC, softness in consumer PC demand will reduce 2022 PC shipments by 8.2% compared to last year. Desktop and laptop PC shipments reached 348.8 million units in 2021, so it is forecast to decline to 321.2 million units this year.
Inventories that are becoming liabilities
Ever since PC demand began outpacing supply in Q2 2020, PC makers have worked overtime to buy parts and build inventory to meet demand. Leading PC makers such as Acer, Dell and HP buy chips directly from their developers/manufacturers and stock them to avoid disruptions in their supply chains.
Now that demand for consumer PCs is slowing (though not to pre-pandemic levels), oversupply is becoming a liability for their inventory, which is good for the end user but not good for business. In fact, Acer’s chairman is reported to have said that the supply of laptops has exceeded demand.
Companies like Acer, Asus, Gigabyte and MSI typically sell to consumers, so they suffer from soft demand, especially for entry-level and mid-range models. DigiTimes According to the first quarter accounting records, the inventory value of Acer, Asus, MSI and Gigabyte increased by 26.59%, 79.51%, 77.62% and 64.59% year-on-year respectively. It can be good if there is a demand inventory, but now it is depleting and it can be a loss as some components and finished goods lose their value quickly.
However, not all PC makers are concerned about smoothing demand or supply. For example, if you buy a MacBook Pro 14/16 from Apple today (either in the US or Europe), the company won’t be able to deliver it until August. The systems are available for pickup from select Apple Stores.
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