The semiconductor market is booming. Intel, AMD, Nvidia, and associated companies are all recording huge profits, but actual PC shipments in North America fell in Q3 2021, while global sales grew by just five percent.
In a market as mature as PCs, five percent growth would typically be a great result, but these are scarcely ordinary times. Ongoing pandemic shortages may explain at least some of the US decline, though the shift away from remote work and schooling accounts for the rest.
“Bottlenecked supply chains and ongoing logistic challenges led the U.S. PC market into its first quarter of annual shipment decline since the beginning of the pandemic,” said Neha Mahajan, senior research analyst, Devices and Displays at IDC. “After a year of accelerated buying driven by the shift to remote work and learning, there’s also been a comparative slowdown in PC spending and that has caused some softening of the U.S. PC market today. Yet, supply clearly remains behind demand in key segments with inventory still below normal levels.”
Even with this growth slowdown, the PC market’s Compound Annual Growth Rate has hit 9 percent since Q3 2019. That’s according to Canalys, which reports that both desktop and laptop shipments grew year-on-year, but the market remains overwhelmingly tilted towards laptops. Notebook and mobile workstation shipments grew 3 percent year-on-year, to 67.4 million units, while desktop shipments grew 12 percent, to 16.6 million units. The desktop market has largely shrunk to include PC gaming, workstations, and low-end systems. During the pandemic, total unit shipments surged sharply towards laptops, thanks in no small part to the overwhelming popularity of Chromebooks.
The question of what the long-term future of the PC market looks like varies depending on who you ask. Companies like Intel, AMD, and Nvidia have been bullish about the prospect of long-term demand, while analysts have more bearish expectations. While no one expects the pandemic-era growth to continue in the long term, the question is whether or not the market will remain as active as it is right now, or if consumers will shift away from PCs and back towards other devices over the long term.
Also, according to Canalys nobody should expect the current supply chain situation to improve any time soon. The analysis firm states that “The shortfall in supply of PCs is expected to last well into 2022, with the holiday season of this year set to see a significant portion of orders not met. Vendors able to manage this period of operational upheaval by diversifying production and distribution and having better visibility of orders to prioritize device allocation will be equipped to ride out the storm.”
Shipments fell in countries like the US, Canada, and Japan, but these declines were offset by strong growth in Latin America, EMEA, and Asia-Pacific other than Japan, where shipments were up 17 percent, 16 percent, and 13 percent respectively.
Much would seem to depend on what happens to the Chromebook market over the next year. Chromebook demand drove a mammoth part of the PC market’s growth during the pandemic, so whether or not it declines will likely depend on what long-term demand for Google’s platform looks like. That, in turn, may be shaped by how countries around the globe continue to deal with the pandemic. Intel, TSMC, and Samsung have all committed to aggressive capacity expansion plans over the next few years, signaling where they think the market is headed.
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