After nearly three years of record-high demand for computers, PC shipments are dropping. What is really concerning is that these drops are across the board, with some companies seeing massive declines. However, there are a few standouts, like Apple, that actually managed to set decent growth.
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It appears that many companies and investors failed to see that demand would eventually go down. This is partly due to the speed at which demand for technology like computers skyrocketed. Now, many Americans have returned to the office. Making matters worse is the fact that the country appears to be on the verge of a recession.
What Do the PC Shipment Numbers Look Like?
New information from the data tracking site Canalys shows most computer manufacturers are facing some grim times. From the third quarter of 2021 to the third quarter of 2022, there was an average 12.1% decline in growth. Regardless of industry, a 12% decline in growth is really bad and is a major sign that things are beginning to change in the market.
The largest percentage drop was HP, which shipped 23.2% fewer products in quarter three of 2022 than they did in 2021. Lenovo came in right behind HP with a 22.2% drop in the same period of time. Fairing a little better was Dell, who still had a pretty bad 16.9% decline. Other manufacturers had a combined 9.1% drop, which is interesting, to say the least.
It appears that larger companies like HP were probably selling a lot more volume, which caused a more significant decline compared to smaller manufacturers. But even more interesting is that computer shipments are still up significantly compared to pre-pandemic numbers.
About four million more computers were sold in the third quarter of 2022 than in the first quarter of 2020. This may signal that the drop-off in sales is far from over, as demand will likely go back to pre-pandemic levels at some point.
Especially with the rising costs of goods which are putting a strain on people’s wallets. However, the next quarter may not paint an accurate picture of where the market is going since it will have the holidays, which usually see a bump in sales with people buying computers as gifts.
Standouts in the Industry
Not everything was doom and gloom in this latest report, as there were a couple of companies that managed to see decent growth. Acer saw a whopping 14% growth from the previous quarter a year ago. It is really difficult to pinpoint Acer’s massive success, but it could be attributed to cheaper offerings, such as Chromebooks, which are growing very popular.
But one company, in particular, has some outstanding news, and that is Apple, with an amazing 26.5% growth from the previous year. This is pretty incredible, considering the high price tag of Apple computers. However, this demand is likely coming from a surge in demand for the M2 MacBooks, as well as Apple having a large number of backorders last year.
What’s Causing the Drop in PC Shipments?
There are a number of factors at play in the tech sector that can easily be attributed to the drop in PC sales. The pandemic, chip shortage, and inflation have all had major effects on consumer purchasing trends. Therefore, it is hard to decipher exactly what is causing the current drop in demand. However, we can analyze each factor.
Pandemic
First, there was the pandemic which forced many people to work from home. This caused a large surge in demand for technology such as computers, printers, and other devices.
People working at home now needed their own devices rather than ones in the office. This was an unforeseen surge that companies were not prepared for, and it led to some businesses, like Apple, being back-ordered for months.
Chip Shortage
Shortly after the pandemic began and the demand for electronic devices took off, there were some signs that the semiconductor industry couldn’t keep up. These chips go into nearly every electronic device manufactured, and it caused a ripple effect through dozens of industries, such as the automotive, computer, and gaming sectors, which further drove prices up.
Inflation
Making matters even worse was inflation, which also started growing at the start of 2021. This was partly fueled by America’s lack of discretionary spending along with government stimulus checks. People having money is a good thing. However, all this money being dumped into the economy at a time when production was slowed thanks to the pandemic only made problems worse.
Is the PC Chip Shortage Over?
With the surge in supply and drop in demand for certain products like computers, you would probably assume that the chip shortage is over. Don’t rush to this conclusion just because things are finally looking up.
While many industries are seeing an overabundance of chip supply thanks to ramping up production, other industries are still struggling. GPUs, specifically, are finally seeing some much-needed declines in demand.
However, other sectors, like the automotive industry, are still struggling to meet demand. The problem with high demand in some sectors and low demand in others is that there is no way to balance things out. For instance, GPU semiconductor manufacturers can’t easily start making chips for the automotive market.
Conclusion
Demand for tech devices like computers reached an all-time high during the pandemic. But it looks like things may finally be going back to a sustainable level. The spike in demand caused real challenges, and the supply chain clearly struggled.
However, none of this could last forever since most people don’t need to purchase new computers at the level they have been. But things aren’t all doom and gloom. Some companies have seen increasing demand.
Apple’s continued innovation is just one example of how consumers will flock to new products that are impressive. Asus’ shift toward cheaper devices like Chromebooks is equally impressive and something other manufacturers should consider going forward.
